New documents reveal Dix’s pivotal role in 1990s scandal

[Rwede]

New documents reveal Dix’s pivotal role in 1990s scandal

Will the “I was only 32″ defence work for Adrian Dix in the extraordinary story revealed in new documents obtained by B.C. Political Reports?



Adrian Dix attended 21 BC Hydro board meetings over 22 crucial months in the lead-up to one of the NDP’s most emblematic – yet least understood – failures of leadership, the Raiwind scandal of 1995-96. This gave him a unique opportunity to see first-hand how the board of BC Hydro, led by an NDP appointee, was charting a dangerous course with an international business venture.


Unanswered questions have lingered for years over what Dix, then a New Democrat political staffer, knew and how he could have created a better outcome but did not.

The revelation comes at a time when Dix’s weak leadership is being questioned even within his own party after a series of campaign mishaps and sagging poll numbers.

In yet another unscripted flip-flop, Dix is now embarking on a negative campaign despite months of promises to stay what he called positive. These new revelations mean he may have no choice but to stay with his original plan and stick to supposedly positive ground lest he seem even shiftier than his critics have tried to portray him.

The BC Hydro board minutes obtained via an RCMP investigation show that Dix took no action to prevent messy corporate governance mistakes that should not have been allowed to happen.

Dix made the disturbing claim during the leaders’s debate this week that acts committed at age 35 or under are somehow exempted from “normal” moral or ethical rules.

Was his tender age of only 32 a factor in the Hydro failure?

Or should the voter of 2013 be wondering whether the same character flaw that was also behind Dix’s infamous forged memo and the fast ferries errors will re-emerge should Dix become premier of B.C.?

Was Dix merely a youthful errand boy for his boss, NDP minister Glen Clark, or did his senior political position and large salary endow him with some responsibility as well?

New documents in the possession of B.C. Political Reports show that Dix had a front row seat in the making of BC Hydro’s Raiwind scandal in which both the $9-billion Crown corporation’s chairman and its president were removed from their positions.

These documents – over 100 pages – could have been brought to light years ago by Dix’s present-day chief communicator on Twitter, the former NDP MLA David Schreck.

But they were not.

Instead, Shreck has kept them hidden them all these years.

Now they are out in the open.

Schreck, a director of BC Hydro during the scandal period, was challenged to do the right thing but chose instead to withhold the board minutes from public scrutiny in 1996 and release only a tiny selection of papers.

As The Vancouver Sun stated at the time, if Shreck “really wanted to help he would have released the minutes of all the meetings.”

It took the efforts of the Royal Canadian Mounted Police to pry them free.

So why did Schreck fail to clear the air over by disclosing what he and Dix knew about the share ownership scandal?

Was he protecting his boss and Dix at a moment when Glen Clark was preparing to oust NDP premier Mike Harcourt?

The papers provide some answers to these questions – and fuel speculation around others where only Dix and Schreck would be likely to have the answers should they ever decide to come forward.

They also provide new information on how the New Democrats used their control of BC Hydro to make it into a sort of social engineering laboratory where the prime objective of providing electricity to citizens was suddenly in competition with new goals that had nothing to do with the core mission.

Just the sort of thing that is already being promised by the NDP with election promises to special interests like the BC Federation of Labour.

The long-awaited Hydro board documents, and what they tell us of Dix’s character and activities, form the basis of a series starting tomorrow here at B.C. Political Reports.

[Rwede]

Dix & Hydrogate Part 2: “An ill-fated partnership-cum-offshore tax dodge”


Adrian Dix was ministerial assistant to Employment and Investment Minister Glen Clark when BC Hydro launched the Raiwind power project, “an ill-fated partnership-cum-offshore tax dodge involving Hydro and a dubious operator in Pakistan” in the words of one journalist. 2nd in a series.

Political journalist Vaughn Palmer was looking back on events two years previously when he offered this summary on March 21, 1997, after RCMP had investigated and the matter proceeded to the courts:


“One of the more telling accounts is provided by John Sheehan, the fired president of Hydro, who described his efforts to alert Mr. Clark to the pressures that were being put on Hydro directors and staff to purchase shares in the Pakistan project.

“Mr. Sheehan’s testimony indicates he had no success in engaging the then cabinet minister on his concerns. Mr. Clark paid so little mind that seven months after meeting with the Hydro president he could not recall the contents of their conversation.”

Board minutes suggest that had Glen Clark wanted to refresh his memory he could easily have turned to his senior staffer Adrian Dix, who on Clark’s behalf attended nearly every board meeting that took place as the scandal was forming.

The pair of men also attended a number of these board meetings together. Yet Dix apparently did nothing at all to warn his boss of what NDP-appointed Hydro chair John Laxton (a “devout NDP supporter” in the words of Palmer) was up to.

The new documents reveal many signs that Hydro directors were well aware of a brewing governance problem at the province’s biggest Crown corporation.

Politically, the background was that Glen Clark was about to take down NDP premier Mike Harcourt, who was hurt by the Bingogate scandal and would not survive beyond February 1996. Where Clark’s fortunes rose in the wake of Harcourt’s demise, so did those of Dix (and Schreck).

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RCMP investigators by November 1997 identified the period of June 1994 to February 1996 as the crucial timeframe to probe in their investigation into the Raiwind affair.

Dix’s involvement started slightly before that window. Before he first attended the board on March 21, 1994, certain aspects of the NDP vision for Hydro were already moving forward.

On Oct. 18 1993, Glen Clark (without Dix) attended a Hydro board meeting where the strategic direction of a BC Hydro subsidiary, BC Hydro International Limited (BCHIL) was discussed. Directors were given background on its “mandate, mission, objectives, operations, international challenges and external opportunities,” according to the board minutes obtained by B.C. Political Reports. It was the ninth item on the agenda; Clark joined the meeting during the BCHIL presentation and stayed on for the in-camera session that followed. BCHIL was the driving force behind the Pakistan Raiwind affair and this may be the first occasion when the coming story can be discerned.

David Schreck, Clark’s eyes and ears on the Hydro board, was also present.

Subsequently, on Dec. 13, 1993, Glen Clark once again attended a Hydro board meeting. He stayed around only for the first item, an in camera meeting featuring a presentation by NDP appointed CEO Marc Eliesen. (The records of in-camera sessions were not among records provided to B.C. Political Reports.)

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(Eliesen remains an NDP shill to this day along with other NDP heavyweights of the 1990s like Dixman Tom Gunton, who on Friday shamelessly used his position at SFU to release a politically loaded report slamming economic development of B.C.’s natural resources. Eliesen recently told an Enbridge Northern Gateway Joint Review Panel (JRP) hearing that the Enbridge plan relied on “bogus economics with misinformation” and should not be approved.)

The Pakistan venture

Dix first shows up in Hydro board minutes on March 21, 1994. He attended again on May 2. By his third appearance, the Pakistan venture had more meat on its bones. It was here, on May 15 in Fort St. John that those assembled were first informed about a “business opportunity” for Hydro in Pakistan.

May 15 was the second board meeting Dix attended without his boss Glen Clark. From this time forward, 63 per cent of the meetings he attended were without Clark — despite his tender age of only 31, to paraphrase his recent memo-forgery defence.

Schreck was there too. It was first meeting attended by John Sheehan in the role of acting president and CEO, Eliesen having just left the role. Chairman John Laxton was formally appointed as chair of Hydro’s Canadian entity. And it was at this moment of leadership transition, with Dix present, that Laxton revealed his plans for Pakistan.

According to the board minutes, Laxton “reported on his recent visit to Pakistan during which he met with senior government officials in Islamabad.”

The minutes state that:


“B.C. Hydro staff involved with the visit are now preparing feasibility studies in an ongoing effort to further develop opportunities for participation in business activities in Pakistan.”

So Adrian Dix had reason to be aware from the very beginning that Laxton was the proposer of the Raiwind project.

Looking back, it seems to have been a moment in time when the Glen Clark effect was taking hold across the provincial government – the idea that entrepreneurial state-backed business ventures represented a smart way to grow the economy. Unfortunately, the application of this theory was a bust in practice since it led not only to the Raiwind disaster but also the fast ferry debacle.

In June 1994, the Pakistan opportunity again came up. Later, when police investigated, this was the starting point for their investigation.

The 12th item on the agenda was the future of the electric industry. According to the minutes:


“John Sheehan introduced a series of presentations dealing with the rapidly changing electric power industry and B.C. Hydro’s role in an environment of significant transition.

“Jassi Cheema summarized electric utility industry trends, commenting on recent changes in the U.K., Canada and California. He discussed the transmission, generation and distributions markets, addressed customer expectations, environmental concerns and financial needs, concluding his presentation with an analysis of the implications of the changing industry on B.C. Hydro.”

From this sweeping overview emerged, it would seem, much of the confidence that a brave new world was awaiting B.C.’s largest Crown corporation under the NDP.

At this point, Dix left the meeting and did not return. Nothing more related to the Pakistan business opportunity is listed in the minutes after he left the room.

June 1994 was a busy month for Adrian Dix and Glen Clark, so his early departure may not be surprising. For it was the moment when the pair were cooking up their other great Crown corporation fiasco of the period: the fast ferries.

According to Auditor General George Morfitt in his searing 1999 report into how Clark and Dix squandered half a billion dollars on useless vessels:


“In June 1994 the provincial government announced, as part of a 10-year capital plan for the British Columbia Ferry Corporation, the construction of three fast car ferries at a total cost of $210 million. By building the ferries in British Columbia, the government hoped to meet BC Ferries’ operational needs and, at the same time, revitalize the province’s shipbuilding industry through the future export of aluminum fast ferries.”

The story of Dix’s involvement in the fast ferries affair has been told here.

Two months later, on Aug. 26, 1994, the Hydro board met again with both Clark and Dix attending, as well as Schreck.

Heady visions of labour-led capitalism

At a moment when Clark and Dix were carrying forward a fatally flawed notion of labour-led capitalism on the fast ferries, a similar idea was brewing with Hydro. In many respects it was quite different. However, the uniting factor was grand ambition to develop international business opportunities from the platform of Crown corporations.

The Hydro board was updated on a BCHIL deal to operate a joint Argentinian-Paraguayan hydroelectric facility, Yacyreta. Sheehan painted an enticing picture of the upside for BC Hydro. It was too important to be delegated below the senior-most level of the organization: both Laxton and Sheehan would soon be leaving for Argentina to personally advance the negotiations.

Exciting times.

But Yacyreta was only an appetizer. The next item on the agenda was an extensive presentation and discussion of “potential business opportunities in Pakistan and equity investment.”

A pivotal moment in what would follow – with Dix, Shreck and Clark all on hand as witnesses.

[Rwede]

Dix & Hydrogate Part 3: BC Hydro a social experiment

If Adrian Dix learned anything in the 1990s, it may simply be that when you monkey with large, complex organizations, the results can be unexpected.

The BC Hydro governance fiasco is a case in point. It is relevant today because Dix wants to become premier of the province, despite his pivotally involvement in deeply flawed and costly ventures in the past involving at least two Crown corporations. Given that little has changed in the left-wing New Democrat party he heads, it is a certainty that the same pressures that applied then would apply now if the party forms a government.

Back in 1994 when the Hydro-Raiwind scandal began to take shape, it was already clear to directors of B.C.’s largest Crown corporation that, with the blessing of the young ministerial assistant at the table, some of the more doctrinaire strains of New Democrat left philosophy were going to be applied to the utility.

Previously undisclosed board minutes obtained by B.C. Political Reports show that Dix, along with NDP-appointed directors on the $9-billion power generator, had made it clear by 1994 that British Columbians needed “socially progressive” electricity — without any definition of what was intended by the phrase.

Lots of public organizations write vague, lofty principles into their strategic plans – yet few of them follow them off a cliff the way Hydro did with the subsequent Raiwind affair.

Even before Hydro’s unfortunate overseas investment that led to “an ill-fated partnership-cum-offshore tax dodge,” the new strategic direction was being manifested in various ways.

As ministerial assistant to Employment and Investment Minister and later British Columbia premier Glen Clark, Dix had been dispatched to ride herd on the board of Hydro while it was undergoing a major strategic makeover.

The documents strongly suggest that the only thing that mattered to Dix was winning the 1996 election.

In November 1994, directors were told of “various initiatives” for building relationships with B.C. Hydro’s union and the board expressed a desire to monitor progress over the next year. Which made a lot of sense – who wouldn’t want a harmonious relationship with unions?

Yet at the same time, Hydro’s NDP masters proved quite willing to abandon their principles if an opportunity beckoned. As the 1996 election (with its notorious Fudge-It Budget) approached, Dix was present when the board decided that to keep rate increases down for residential customers, it would eliminate 500 workers.

The new strategy, encapsulated in a document called The Way Ahead, also called for Hydro to adopt a focus on developing export markets for its technical services and expertise. By this time, Hydro had fallen under the sway of the Crown corporations secretariat headed by a former union leader.

The secretariat attended strategic sessions for the utility to ensure the NDP line was pursued.

The Crown jewel of B.C. was slowly falling into line.

[Rwede]

Dix & Hydro Part 4: BC Hydro chiefs went to board for approval after deal signed

The Aug. 26 1994 B.C. Hydro board meeting was a watershed moment for the transition of the $9 billion Crown corporation. Three years into the New Democrat mandate, the provincial government had placed it under the direction of the powerful new Crown Corporation Secretariat run by a former trade union official.

It was now being remade into a giant vehicle for advancing NDP doctrines that seemed at times to have less and less to do with supplying electricity as the primary mission.

As a result of taking the focus off Hydro’s core mission, under the NDP in the 1990s B.C. became a net importer of power for the first time and the party even considered selling off Hydro according to a 2000 policy paper.

Hydro had a new strategic plan calling for “socially progressive” electricity. Whatever that was, it came dressed. And under the new plan it was about to embark on an international mission to expand the business into uncharted – and, it proved, disastrous – territory.

Adrian Dix, aged 32, was with his boss Glen Clark at the August board meeting at Coast Harbourside Hotel in Victoria when directors worked their way through a thick package of papers to Item 12.

What an imbroglio it became.



As a result of imminent decisions that Dix was privy to, Hydro chair John Laxton and Hydro CEO John Sheehan were fired, other senior managers were under a cloud and Glen Clark was accused of knowing more than he was saying in the complex international investment scheme. Professional careers were on the line and the political credibility of the premier was tested. It took a team of investigators to be called in to spend eight weeks reviewing 23,000 pages of documents, interviewing 38 witnesses, reviewing 2,000 pages of transcripts, and writing a 167-page report.

Even then the answers were not found and the RCMP were later called in – at which point they requested a further set of documents from BC Hydro including the board minutes obtained by B.C. Political Reports that have never come to light until now.

Had Dix exercised the kind of judgment that he confessed during the 2013 leadership debate he did not even possess in his 30s, there might have been a very different outcome. He attended 21 Hydro board meetings in 1994-95 as the Pakistan scandal took shape and crucial questions of investment by directors were discussed.

The errors committed with Dix at the table cost taxpayer $11 million in the end, according to the Victoria Times-Colonist.

Sign first, get approval later

On the 26th of August, CEO Sheehan began his presentation by outlining to the assembled directors, Adrian Dix, Glen Clark and a handful of others the the fantastic business opportunity awaiting BC Hydro in Pakistan.

With the charm of an Anthony Robbins, he walked them through the proposed participation of Hydro’s international subsidiary BCHIL in a “Build-Own-Operate” power generation project in Pakistan” as well as a Memorandum of Understanding that had been “recently” reached between BCHIL to go ahead with the project.

The minutes refer back to a May board meeting where the issue had been discussed.

Strangely, the records reveal no director approval was specifically sought or granted to embark on the Pakistan adventure. Apparently, management had waited until now, with an MOU signed, to seek the go ahead.

Sheehan told directors and the others that the MOU he had signed included a condition requiring BCHIL to come up with a $1.2 million capital contribution. To get this money, which BCHIL did not have, it would be borrowed from another subsidiary of BC Hydro called Columbia Estate Company.

Sheehan and chairman Laxton now asked the board for the go-ahead to take five important steps toward getting their offshore excursion into gear:
1.Approval for Sheehan and Laxton to proceed with the Pakistan that they had already agreed to;
2.Retroactive approval of the signed MOU;
3.Approval for BCHIL to invest the $1.2 million it did not have;
4.Approval of $500k to start environmental and engineering work; and
5.Approval to borrow $1.2 million from Columba Estate Company.

Directors were told the deal had already been approved by BCHIL directors and those of Columbia Estate. The last ones to be asked, it seemed, were those of BC Hydro itself.

The discussion that followed covered the principle of equity investment and the position of the government of British Columbia. The resolutions before the board were amended “to reflect that Board authorization would be subject to the approval of investment policy by Government.”

A motion then tabled gave management the go-ahead it needed to carry out with the plans. BCHIL gained authorized to do “all such things as are necessary to effect the Pakistan project” as long as the Hydro president approved them first. Borrowing of funds by BCHIL from Columbia Estate was also authorized “for any expenditures not covered by its income” – provided BCHIL’s board signed off first.

A new strategic plan moves ahead

Directors approved these motions and then gave consideration to the amended resolution on equity investment. Its preamble recognized that the new strategic plan of BC Hydro encouraged developing export markets for its technical services and expertise. In this regard, BC Hydro under the authority of the Crown Corporation Secretariat was being led down the same path as BC Ferries – another project where Adrian Dix had been directed by Glen Clark to ride her to make sure NDP intentions were carried out. (In both cases with memorably disastrous results.)

The final approval secured on Aug. 26 empowered Sheehan and Laxton to borrow the funds they needed from Columbia Estate “for the purposes of making equity investments from time to time”.

And thus were sown the seeds of the second most damaging governance disaster of Adrian Dix’s short career. But the concept of sharing risk with the private sector had not yet been broached.

At the next meeting where the Pakistan project came up – October 17, 1994 — it was clear that things were not going as hoped.

Read the minutes:


“The Board wishes to express to Government its frustration with the current mechanism for dealing with the Pakistan project and to notify them that the Board will be developing a comprehensive proposal for dealing with these matters in the future.”

Adrian Dix has chosen never to reveal what was going wrong at this point. But as later investigations showed, cracks were already becoming obvious by this time. Some disquieting signs even began to point in the direction of politicians and their staff like Dix.

[logicalview]

completely and utterly disgusting. Dix has zero integrity, and is just a weasel. How the NDP could have been dumb enough to elect this clown their leader just shows what horrible leadership and judgement that party has in everything it does. The NDP should be banished to the annals of failed parties in Canadian political history.

[twobits]

completely and utterly disgusting. Dix has zero integrity, and is just a weasel. How the NDP could have been dumb enough to elect this clown their leader just shows what horrible leadership and judgement that party has in everything it does. The NDP should be banished to the annals of failed parties in Canadian political history.

Yup.......and you would have thunk the bags of 20 dollar bills five minutes before deadline would have been a tip off huh? The sweet justice is that they got the leader they deserved.