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Gig trouble

Friday, May 25, 2012

Council to discuss missing concert money

Councillors should demand an open meeting, and refuse to allow Peter Kelly to preside.

Posted By on Fri, May 25, 2012 at 2:10 PM

Trade Centre Limited presented the city of Halifax with a bill for $359,550 related to concerts on the Halifax Common on September 30, 2010---that was 20 months ago---but still the issue hasn't been resolved. Some of that delay related to former acting CAO Wayne Anstey and mayor Peter Kelly keeping the bill secret from anyone who could do anything about it, but they eventually brought it to then-finance director Cathie O'Toole, who immediately alerted the city auditor general and council's audit committee, opening up publicly what we now refer to as the "concert scandal."

Last month, Halifax council adopted the 2012/13 annual budget, but made no provision for paying the $359,550 bill or for fighting it. For what it's worth, it's my opinion that the city should refuse to pay it, and tell Trade Centre to pound sand. TCL president Scott Ferguson knew damn well the advance-on-ticket-sales scheme was improper---he had been specifically warned by a TCL auditor not to engage in such schemes--and yet he recommended that the city be the conduit for the exact same arrangement to fund Common concerts promoter Harold MacKay.

But this coming Tuesday, Halifax council is scheduled to address the outstanding bill (see item 14.1). Problem is, the matter is scheduled to be debated in secret.

The secrecy is unwarranted. There is simply too much public interest in the concert fiasco for council to come to some resolution behind closed doors. Beyond that, the scandal exists precisely because Kelly thought he could do the public's business without letting the public know what was going on. This matter, more than most, demands open and public resolution. Councillors should demand that the issue be discussed publicly, and in front of the TV cameras.

Moreover, council should refuse to allow mayor Peter Kelly to preside over the conversation. Despite his claims to be an innocent bystander, documents prove that Kelly was involved in every stage of the improper loans---from receiving Ferguson's recommendations, to signing onto the loan documents themselves, to his office not sending the loans to the finance office for approval, to going so far as to arrange hush-hush meetings at the Sunnyside Restaurant in Bedford instead of at City Hall, where city staff would know about them. It would be simply outrageous to allow Kelly to preside over any discussion or vote about resolving the unpaid bill.

Councillors should hold the conversation in public, and refuse to let Kelly preside. Anything else is counter to the public interest.

Read Tim Bousquet's detailed investigation of the concert scandal here. Follow him on Twitter @Tim_Bousquet.

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Wednesday, May 2, 2012

Missing concert money not accounted for in city budget

Trade Centre Limited's control of Ticket Atlantic will be subject of auditor general report.

Posted By on Wed, May 2, 2012 at 4:00 AM

gigtrouble.jpg
Halifax council has passed two annual budgets since the concert loan scandal became public, but the missing money still hasn’t been accounted for.

In March, 2011, then-city finance director Cathie O’Toole told Halifax council that city officials had improperly advanced a series of loans to concert promoter Harold MacKay, that those loans violated the city charter and the city’s rigorous financial controls and that the city was left holding the bag for $359,550. The next month council adopted the 2011/12 city budget, but leaving the concert bill unresolved.

A June report by auditor general Larry Munroe spelled out the the impropriety, and in December The Coast published further details with documents gathered through the freedom of information act. From 2008 through 2010, a total of $5.6 million was advanced to MacKay’s company, Power Promotional Events. The loans were arranged by top city bureaucrat Wayne Anstey and mayor Peter Kelly, with the assistance of Scott Ferguson, the president of Trade Centre Limited, a provincial crown corporation.

In fact, it was Ferguson who suggested the loans in the first place, even though an auditor had previously reprimanded Ferguson for using a similar scheme to finance a hockey tournament promoter. The plan hatched by Ferguson worked like this: Tickets for Common concerts were bought through Ticket Atlantic, a TCL division; that money was advanced to MacKay to put on the concerts, and guaranteed with an obscure Metro Centre bank account nominally owned by the city but managed by TCL.

The scheme was extremely risky. If a concert was cancelled, the city could potentially be out both the money it advanced to MacKay *and* an equal amount for ticket refunds. At one point the risk was nearly $8 million, yet no one in city hall even knew the Metro Centre account existed, and council never approved the loans. In the end, the last two loans went belly-up, and TCL presented the city a bill for $359,550.

Furthermore, Munroe’s report showed that TCL had taken ownership of Ticket Atlantic from the city in 2006, without any authority to do so. “There is no documentation available showing the change---with respect to Ticket Atlantic---was officially approved by HRM, Regional Council or the TCL Board,” he wrote.

In the wake of the revelations, Anstey took early retirement. Incredibly, neither Kelly nor Ferguson have suffered any consequences whatsoever for the scandal, and Percy Paris, the minister for economic development, has said that he has “great confidence” in Ferguson, who Paris says did “a wonderful job.”

Before he was allowed to put on last year’s Metallica show, the city collected $38,000 from MacKay, supposedly to pay back some of the lost money. But neither the $38,000 nor the $359,550 was accounted for in the 2012/13 city budget passed by council just three weeks ago, and TCL still lists the full amount as outstanding.

Asked about the unaccounted-for money, city spokesperson Shaune MacKinlay says a staff report on the concert money will be “going to council soon---hopefully within the month.”

In his auditor’s report, Munroe had suggested that the city could mount a legal challenge TCL’s claim. Munroe also said that he was going to conduct a follow-up investigation examining the relationship between TCL and the city, specifically with regard to the ownership of Ticket Atlantic. The results of that investigation have yet to be published.

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Friday, August 5, 2011

Deal with Harold MacKay makes city look bad, weakens bargaining position with TCL

Metallica attendance was 24,000.

Posted By on Fri, Aug 5, 2011 at 2:50 PM

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I was wrong: contrary to my earlier supposition, the payment from Harold MacKay to the city just before the Metallica show was in fact related to the concert loan scandal, and not simply pre-payment for Metallica costs.

Council Tuesday released this statement:

13.3 Contractual Matter – Concert Update
That Halifax Regional Council approve the settlement with Harold MacKay and any related companies which provides for:
(a) the payment of $38,000.00 in satisfaction of the Municipality’s claim for recovery of funds advanced in respect of concerts on the Common; and in addition
(b) the payment of the cost of policies services provided for the Metallica concert on the Garrison Grounds.
It is further recommended that this report be released to the public following Council’s ratification of the recommendation.
I didn't immediately report this because I wanted clarification as to how the $38,000 figure was arrived at. I dutifully called City Hall Wednesday morning to ask, was promised a response, but have heard nothing back. This is, I'd add, precisely why I was incorrect in my previous reporting: the city bureaucracy is treating the concert scandal as some sort of state secret; without firm information in hand, the best we can do is make informed guesses as to what's going on.

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Friday, July 22, 2011

ACOA money went to support Snoop Dogg concert

Enterprise Cape Breton Corporation gave $36,000 grant and $145,000 loan to Captive Promotions

Posted By on Fri, Jul 22, 2011 at 3:37 PM

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Last year, just as provincial crown corporation Trade Centre Limited was losing $159,550 loaned to a concert promoter in Halifax, the federal crown corporation Enterprise Cape Breton Corporation was propping up a promoter in Sydney with a $145,000 loan and a $36,000 grant.

ECBC, which falls under the Atlantic Canada Opportunities Agency, gave the money to Captive Communications and Promotions to put put on the Snoop Dogg concert on the Sydney waterfront last August 8. The loan was issued July 28, 2010, and the grant was issued July 30, 2010.

The $36,000 was used to buy radio ads in Moncton, Halifax and Newfoundland, says Stephen Tobin of Captive. The $145,000 loan was working capital, and was paid back the night of the concert. About 6,000 people attended the show, says Tobin.

The ill-fated Black Eyed Peas and Alan Jackson shows in Halifax were held July 24 and August 7, respectively.

"I don't agree that the government shouldn't be involved [with concerts]," says Tobin. "I think there is a role for government to play. I don't think it has to be as significant an allocation as we saw in Halifax."

ECBC claims the Snoop Dogg concert brought an economic impact of exactly $1 million, but has not provided any documentation for that claim. "ECBC has not provided assistance to other major concerts in the area or for the upcoming Elton John concert," says communication director D.A. Landry.

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Monday, July 4, 2011

Media mis-report "showdown" between Richard Butts and Harold MacKay over Metallica show

There's no evidence that MacKay has paid any of the money lost on Common concerts.

Posted By on Mon, Jul 4, 2011 at 12:51 PM

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Under the headline "Concert promoter agrees to pay HRM thousands," last week, CBC broadly implied that concert promoter Harold MacKay had paid back about $40,000 of the the $359,550 lost in the Common concert fiasco:
The city had been trying to recover approximately $359,550 — a portion of a $400,000 advance issued to MacKay's former company for the Black Eyed Peas and Alan Jackson concerts.

Tickets sales for the concerts were poor and the municipality ended up losing the money.

Sources told CBC News the city told MacKay that if he paid a settlement of $40,000, it would not withhold municipal services for the Metallica concert next month. The July 14 concert is being put on by MacKay Entertainment Inc., run by MacKay's wife.

[clip]

Although Halifax Regional Municipality officials declined to comment on the story on Wednesday, they confirmed there are ongoing discussions about how to recover the rest of the money.
[emphasis added]

Today, in his column in Metro, Stephen Kimber takes the ceeb's implied recovery of past due amounts from MacKay and runs with it:

Continue reading »

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Wednesday, June 29, 2011

City embarrasses itself with Metallica fiasco

Without a leg to stand on, bureaucrats chase Harold MacKay, then back down.

Posted By on Wed, Jun 29, 2011 at 3:06 PM

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In a bizarre and inexplicable move, this past week the city of Halifax attempted to force the promotion company for the July 14 Metallica concert on Citadel Hill to pay the $359,550 bill for the Common concerts fiasco.

With the advice and encouragement of Scott Ferguson, president of provincial crown corporation Trade Centre Limited, Halifax mayor Peter Kelly and top city bureaucrat Wayne Anstey had from 2008 through 2010 signed contracts guaranteeing loans of $5.6 million in TCL money to concert promoter Harold MacKay’s company, Power Promotional Events.

Kelly signed the contracts even though they violated city financial rules and the city charter, and even though they were not properly vetted by the city legal staff; after signing the contracts, Kelly did not deposit the contracts with the city clerk, as is required. Ferguson, for his part, had been explicitly warned by an auditor that loans from ticket sales brought unacceptable risk, but he OKed the loans anyway.

Under the terms of the contracts, the last two loans, for $200,000 each, were to be forgiven if certain ticket sale levels were not met. Those levels weren’t met, and so MacKay was under no obligation to pay the money back.

But that didn’t prevent the city from threatening MacKay’s wife’s company, MacKay Entertainment, which is producing the Metallica show, with a cut off of city services unless it paid the money lost through Kelly, Anstey and Ferguson’s bungling. Without city services, the Metallica show would have been cancelled.

The whole episode was a poor attempt at bluster on the city’s part, and most observers saw right through it. City council argued about the issue in secret for four hours Tuesday, then did nothing. But after MacKay called a press conference at his lawyer’s office for Tuesday evening, city CAO Richard Butts quickly backed down, announcing a “settlement." But the city will provide all services for Metallica and MacKay won't pay any of the money lost by the bureaucrats.

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Tuesday, June 28, 2011

Possible Metallica cancellation: City picks wrong target in attempt to recoup concert costs

City administrators demand payment from Harold MacKay, gives Trade Centre Limited a pass.

Posted By on Tue, Jun 28, 2011 at 8:13 AM

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Harold MacKay is right: He doesn't owe the city of Halifax one cent.

But city administrators are demanding $359,550 from his wife's company, MacKay Entertainment, before agreeing to provide city services to the July 14 Metallica show on Citadel Hill. The city oversees and regulates police, fire, licensing and other aspects of the concert; without city cooperation the concert will be cancelled.

From 2008 to 2010, Halifax mayor Peter Kelly and former top bureaucrat Wayne Anstey agreed, in writing, to guarantee loans totalling $5.6 million to MacKay's previous company, Power Promotional Events. The loans were used as working capital for a series of concerts on the Halifax Common; the money ostensibly came from advanced ticket sales to those shows, but a review by Halifax auditor general Larry Munroe shows that much of the money was loaned before tickets even went on sale for the concerts. The money came from a bank account owned by the city, but consisted mostly of money claimed by Trade Centre Limited, the provincial crown corporation that manages the Metro Centre on the city's behalf.

Last summer, on July 21, 2010, Kelly and Anstey agreed to a contract backing two last loans to MacKay, for $200,000 each---one for the Black Eyed Peas show, one for the Alan Jackson show. Unlike previous loans, MacKay was to only start repaying these two loans when ticket sales reached certain levels: 9,000 for Black Eyed Peas and 10,000 for Alan Jackson. If those levels weren't reached, "the grant shall be forgiven," reads the contract. Just 8,362 tickets were sold for Black Eyed Peas, and 10,009 for Alan Jackson; MacKay paid back just $450 for the Jackson show, and $40,000 for rental of the Common, leaving $359,550 unpaid. (Arguably, the Common rental fee shouldn't be applied to the loans---I've yet to see any justification for it--- but that issue has never been investigated.)

The copy of the contract made public does not have any stamp from the city's legal department, suggesting this is one of the contracts flagged as problematic by Munroe. It's clear that Peter Kelly knew these contracts wouldn't pass legal muster, and he wasn't depositing them with the city's clerk, as is required. And it's also clear that neither Kelly nor Anstey had the authority to make the loans; expenditures of this sort are required by the city charter to be vetted by city financial staff and city council, and these loans were not.

But I don't see how MacKay can be held responsible for the impropriety. Say what you will about MacKay---he has a knack for not making money on even mega rock stars like Paul McCartney---but he covers all his bases as a businessman. Like it or not, limited liability corporations are an established vehicle for isolating risk behind a fire wall; there's no conceivable argument for holding MacKay's wife's LLC, MacKay Entertainment, responsible for debts owed by Harold MacKay's LLC, Power Promotional Events. And as far as I can see, Power Promotional Events doesn't owe the city any money in any event---MacKay met the terms of the contract.

The city could, however, go after Trade Centre Limited for the money. TCL is culpable on a number of fronts: The $400,000 was loaned from advanced ticket sales from which TCL, not the city, would profit; the money was TCL's to lend, not the city's. As manager of the Metro Centre bank account, TCL had a fiduciary responsibility for the account, and to vet loans made from it. And, most importantly,TCL president Scott Ferguson had been explicitly notified by TCL's auditor that loans from advanced ticket sales brought irresponsible risk, but Ferguson OKed such advances anyway, with the understanding that the city was backing them; having fiduciary responsibility for the account, he made what he knew was improper payments.

So why is the city going after MacKay, who is legally blameless, instead of Trade Centre Limited, which is up to its elbows in legal culpability? Answer that question, and you understand much of what is wrong with Nova Scotia governance.

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Wednesday, June 22, 2011

Council won't hold Peter Kelly accountable

Halifax mayor easily survives censure motion.

Posted By on Wed, Jun 22, 2011 at 3:52 PM

Halifax mayor Peter Kelly
  • Halifax mayor Peter Kelly
While a broad spectrum of citizens, columnists from competing newspapers and even the former provincial auditor are calling for mayor Peter Kelly to be held accountable for his role in the concerts scandal, Halifax council just wants the issue to fade away into the bureaucratic netherlands.

Last week, council declined to ask the RCMP to investigate the scandal, and council Tuesday refused to slap Kelly with a one-week suspension. Councillor Sue Uteck had given notice that she wanted the suspension debated next week, but a council majority rushed the motion so it could be dispensed with quickly; the motion failed on a 17-3 vote, with only Darren Fisher and Jim Smith joining Uteck. Collectively, council seems to want to deal only with the rather obscure bureaucratic changes recommended by auditor general Larry Munroe, by shuffling them off to council’s audit committee, and otherwise letting bygones be bygones.

Councillors express a range of opinions as to why they voted against the motion. Some fully support Kelly, while others think the motion was inappropriately rushed and needed more study. But whatever their reasons, the bottom line is the political leadership has decided there will be no accountability whatsoever for wrongdoing on the part of the mayor.

“That’s it,” says Uteck. “You know what, if [Kelly] blows a million dollars, whatever, it’s not my issue. Council won’t do anything about it, there’s no accountability, why should I try?”

Still, the scandal won’t go away. A group of citizens is planning a protest before next week’s council meeting; see the “Peter Kelly -- Resign Now” Facebook page for details.

And new revelations about the scandal will continue to come out. Munroe has promised a follow-up to his initial report, looking specifically at the management of the Metro Centre, and a bevy of reporters is continuing to investigate the scandal. Council’s audit committee will take up the issue as soon as next Monday.

But so far, only one person has suffered any consequences whatsoever for the concerts scandal. After a specially called closed-door council meeting in March, top bureaucrat Wayne Anstey announced his immediate retirement, but Anstey was planning to retire in the summer anyway, and he will receive full benefits. The other people in City Hall named in Munroe’s report---Peter Kelly and retired CAO Dan English---have paid no price for their involvement.

Munroe also named two people at Trade Centre Limited. But former president Fred MacGillivray appears to be untouchable, happily collecting his hefty $1.2 million pension, and current president Scott Ferguson has not only suffered no consequences for what was clearly wrong-doing on his part, but has even been praised by Percy Paris, the minister overseeing Trade Centre.

Democratic accountability? Not in Nova Scotia.

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Friday, June 17, 2011

More of Peter Kelly's verbal diarrhea

Transcript of PK's appearance on CBC's Mainstreet

Posted By on Fri, Jun 17, 2011 at 7:16 AM

Mayor Peter Kelly
  • Mayor Peter Kelly
I've been collecting examples of mayor Peter Kelly's evasive responses to direct questions. See here and here, for instance.

The following is a transcript of mayor Peter Kelly’s appearance on CBC Radio One’s Mainstreet last week. I’m indebted to Waye Mason, who slogged through the recording and produced the text below.


My only comment is that this is another example of Kelly’s verbal diarrhea---he simply spews out nonsensical responses that have no relation to the questions being asked, and hopes that we’re dim-witted enough to not get the schtick. I mean to soon to collect all of these on one place, just to more fully illustrate the point.

Continue reading »

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Wednesday, June 15, 2011

Percy Paris praises Scott Ferguson's improper behaviour

Minister for economic development refuses to see clear wrong-doing by Trade Centre Limited president.

Posted By on Wed, Jun 15, 2011 at 7:45 AM

How hard up is economic development minister Percy Paris for a new convention centre? So hard up that he’ll shove any impropriety on the part of Trade Centre Limited officials---financial, ethical, what have you---down the memory hole.

Monday, I detailed how Scott Ferguson, president of TCL, had been warned by the TCL auditor to stop loaning money to promoters from advance ticket sales. There’s a good reason for the auditor’s concern---should the ticketed event be cancelled, TCL would have to refund the ticket price to people who had bought tickets; but if TCL had loaned the money out, then the money would have to come from other funds---that is, from the taxpayer. The hit to the taxpayer could actually be double the loan amount: it’d be the lost loan, and then on top of that the amount needed to backfill the bank account.

Economic Development minister Percy Paris
  • Economic Development minister Percy Paris

We’re not talking small potatoes here. The loans in question were often approaching, and sometimes exceeding, a half million dollars. At one point---on July 19, 2009---the potential loss totalled $7.7 million.

The auditor’s warning came after Ferguson had loaned some unknown (to us) amount of money from advance ticket sales for the 2008 IIHF Hockey Championship. Luckily, that event went on without problem, and the money was repaid. Ferguson, however, was under strict orders from the auditor to never again make such loans.

But auditor, schmauditor. When Harold MacKay came knocking on government’s door looking for some financing assistance for the concerts on the Common, Ferguson OKed still more loans from advance ticket sales, and thought he was covering his butt by getting the city to guarantee the loans. Ferguson hoodwinked mayor Peter Kelly and top bureaucrat Wayne Anstey into signing six contracts with MacKay, with the city guaranteeing the advances. Those documents in hand, Ferguson advanced TCL money to MacKay, exactly contrary to the auditor’s warning.

But the concerts flopped and MacKay’s business went belly up without repaying the last of the loans. Now the city is contemplating refusing to make good on the loans, for $395,550. If the city doesn’t pay, TCL will be out the money. Or, rather, provincial taxpayers will be out the money.

If you or I cost our employer $359,550, we can imagine the consequences. But here’s how Ferguson’s boss, Percy Paris, reacts to the news:

"I’ve got great confidence in Scott Ferguson," the minister said. "I think he’s been doing a wonderful job for the province and the World Trade Centre...

"Scott Ferguson thought that he was acting appropriately. He thought that he was being prudent. He was directed by somebody that he thought had jurisdiction over this money, and he did what he was asked."

This is utter nonsense. There’s plenty of blame to go around for the concert loan scandal, but Ferguson knew the loans were improper, and worked to make them happen anyway by suckering the city into accepting responsibility.

There’s only one conceivable reason for Paris to gloss over Ferguson’s impropriety: Paris has drunk the Kool Aid on the convention centre, which is a Trade Centre Limited project. TCL will oversee construction of the convention centre, and then manage it. Paris very much wants the convention centre, but if TCL is understood to be an unaccountable, out of control bureaucracy with a chief executive, Ferguson, who ignores auditors, overrides financial controls and puts taxpayers at risk for millions of dollars...well, maybe taxpayers will demand a rethinking of the convention centre proposal. Maybe taxpayers will begin to think, “Hey, all those people who were criticizing Trade Centre for using bogus numbers for the convention centre might've been onto something.” So: TCL’s involvement in the concert loan scandal goes down the memory hole.

In Nova Scotia, there is no bureaucratic accountability whatsoever. Slap an “economic development” label on something, and you can do anything you want---break any financial control, snub auditors, put taxpayer money at risk without authority---and it doesn’t matter; the minister will merrily cover your back.

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Tuesday, June 14, 2011

Both Peter Kelly and Scott Ferguson should resign

Halifax mayor and Trade Centre Limited president were responsible for concerts scandal.

Posted By on Tue, Jun 14, 2011 at 6:06 AM

In March, almost as soon as the concerts funding scandal came to light, city hall's head bureaucrat Wayne Anstey resigned. Now, with city auditor general Larry Munroe's report revealing the backstory, the question of blame needs to be raised again. Should mayor Peter Kelly resign over his involvement in the funding scheme?

Halifax mayor Peter Kelly
  • Halifax mayor Peter Kelly
Absolutely. Kelly was intimately involved in the scandal, hosting meetings to arrange the improper financing and signing legal contracts that he had to have known were against city rules. Kelly was one of the main cheerleaders for the Common concerts, urging that still more concerts should be held even though he knew actual attendance numbers for past concerts were far lower than published media reports indicated. And, as if that’s not enough, Kelly knew that millions of dollars in loans were being advanced to concert promoter Harold MacKay, and Kelly knew full well that city council has to approve any financial arrangement of this magnitude, but Kelly kept knowledge of the loans from council. In the face of these facts, there’s no question that Kelly should take responsibility and vacate his office.

Let’s not, however, over-simplify the scandal as a “Kelly screwed up” and leave it at that. Yes, Kelly should resign, but others, too, should be held to account.

In terms of culpability, the biggest player in the scandal is not Kelly but Trade Centre Limited---which I’ve detailed here.

A proper response to TCL’s repeated impropriety is for Halifax city council to refuse to pay TCL’s $359,550 invoice and to initiate legal proceedings against TCL for recovery of all funds related to the unauthorized takeover of Metro Box Office. Additionally, provincial auditor Jacques Lapointe should put TCL under his microscope.

Trade Centre Limited president Scott Ferguson
  • Trade Centre Limited president Scott Ferguson
Much of TCL’s impropriety dates back to the term of now-retired TCL president Fred MacGillivray, who I guess gets to ride off into the sunset, basking in the glow of his $1.2 million pension. But current TCL president Scott Ferguson is likewise at fault to a stunning degree: Ferguson knew that advances from ticket sales were improper---TCL’s auditor reprimanded Ferguson for making advances from ticket sales for the 2008 IIHF Hockey Championships---but Ferguson continued the practice for the Common concerts anyway, by arranging for the city to back the loans.

Put simply, the improper loans would not have been made without both Kelly and Ferguson. Yes, Peter Kelly should resign. And Scott Ferguson should resign as well.

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Monday, June 13, 2011

City officials contemplate suing Trade Centre Limited

Auditor general Larry Munroe and councillor Gloria McCluskey question Fred MacGillivray and Scott Ferguson’s role in concerts scandal.

Posted By on Mon, Jun 13, 2011 at 4:50 PM

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Two city officials are implying there’s a simple solution to the $359,550 bill related to concerts scandal: Don’t pay it.

That course of action, suggested by both city auditor Larry Munroe and city councillor Gloria McCluskey, threatens to create an epic legal battle between the city and Trade Centre Limited, a provincial crown corporation. But it isn’t just the $359,550 at stake; potentially, millions of dollars are at play, as well as the professional reputations of some of the most powerful people in Nova Scotia.

At issue is the biggest revelation in Munroe’s report on the concerts scandal: that in 2006, Trade Centre Limited’s then-president, Fred MacGillivray, shifted ownership of the Metro Centre’s ticket sales agency, called Metro Box Office, to TCL. MacGillivray had no authority to make the change; it was not approved by the TCL board of directors or by the city council. In fact, then-city CAO Dan English only learned of the shift when it showed up as an obscure line item in a budget report, long after the fact. English never notified city council of the change.

The shift of ownership of the multi-million dollar Metro Box Office operation led to the confusing commingling of city and TCL funds that made the concerts scandal possible, Munroe explains in his report on the scandal.

“When I read that, I couldn’t believe it,” says McCluskey. “They took [MBO] over, without even telling Dan English---that’s the kind of power Fred MacGillivray had---and nobody forced him to put it back. Let me tell you something: Fred MacGillivery did whatever he damn well wanted to do. That’s how much power he had.”

“I’m concerned about it,” says Munroe of the transfer of Metro Box Office away from the city. “We have an open file on that. I’d like to understand that transaction. We’re having a look at it---it’s including in phase two [of the concerts investigation]. The city should seek legal advice as to what its course of action is.”

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Wednesday, June 8, 2011

Peter Kelly is the Sarah Palin of Halifax

Verbal diarrhea is the mayor's only response to concerts scandal.

Posted By on Wed, Jun 8, 2011 at 2:22 PM

Halifax mayor Peter Kelly "should have known something out of the ordinary was occurring and should have asked more questions" about the concert funding scheme.
  • Halifax mayor Peter Kelly "should have known something out of the ordinary was occurring and should have asked more questions" about the concert funding scheme.
Throughout his report on the concert loan scandal, auditor general Larry Munroe utterly castigates Halifax mayor Peter Kelly for his involvement in the financial improprieties. Kelly is mentioned by name 54 times in the 96-page report, and his office is cited over 100 times. Here's how Munroe summarizes Kelly's role in the scandal:
Based on interviews and a review of correspondence among a number of parties, it is clear the Mayor’s Office was actively engaged and committed to developing the North Common in Halifax as a major event location. The Mayor’s Office assisted in bringing Power Promotional Events and the Paul McCartney contact - Creative Events Group (CEG) - together, and the Mayor’s Office appeared to remain in frequent contact with CEG and PPE with respect to other potential events as they unfolded. The Mayor’s Office initiated and participated in numerous meetings regarding potential and acquired concerts and responded to and was copied on many emails pertaining to the relationship with Power Promotional Events, HRM and Trade Centre Limited. Later the Mayor’s Office appears to have actively “led the charge” to obtain additional financial assistance from the Province of Nova Scotia.

When this assistance was not forthcoming, the parties actively participated in what was sometimes described as a “rescue operation”.

[snip]

The [Office of the Auditor General] believes the following persons at a minimum, were directly involved, to various degrees, in the decisions around the handling and advancement of funds: Mr. Anstey (who has publically admitted his involvement) and Mayor Kelly who both had access to information and the opportunity to raise concerns through a variety of policies and business practices.

It is our thought, given the level of experience and involvement of Mr. Anstey and Mayor Kelly in the public sector, each of these individuals should have known something out of the ordinary was occurring and should have asked more questions to determine if what they were contemplating and/or doing was appropriate, especially given the method of arranging for payments to be made to Power Promotional Events.

Being fingered by Munroe demands an immediate and clear response from Kelly. But that's not what we're getting.

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Concert report slams Peter Kelly, Wayne Anstey, Fred MacGillivray and Scott Ferguson

City should sue Trade Centre Limited, says auditor general Larry Munroe.

Posted By on Wed, Jun 8, 2011 at 6:59 AM

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Halifax auditor general Larry Munroe released his report on the concert loan scandal Tuesday. Mayor Peter Kelly, the city’s former chief bureaucrat Wayne Anstey and former and current Trade Centre Limited presidents Fred MacGillivray and Scott Ferguson are particularly implicated.

The report names names, assigns blame and provides explosive new details about how city and provincial officials exposed city taxpayers to millions of dollars of risk by improperly giving $5.6 million in loans to concert promoter Harold MacKay’s company, Power Promotional Events.

The loans violated the city charter, city financial controls and accepted bookkeeping practices, says Munroe.

Ultimately, the city lost $359,550 through the loans, but Munroe shows that at one point the city’s risk approached $8 million, and the city additionally spent almost $800,000 in “in kind“ support for the concerts, far beyond the amount approved by city council.

“It is our thought,” writes Munroe, “given the level of experience and involvement of Mr. Anstey and Mayor Kelly in the public sector, each of these individuals should have known something out of the ordinary was occurring and should have asked more questions to determine if what they were contemplating and/or doing was appropriate, especially given the method of arranging for payments to be made to Power Promotional Events.”

Munroe’s report makes clear that Kelly was directly involved in all aspects of the Common concerts, including the financial impropriety. “The Mayor’s Office initiated and participated in numerous meetings regarding potential and acquired concerts and responded to and was copied on many emails pertaining to the relationship with Power Promotional Events, HRM and Trade Centre Limited,” he writes.

But perhaps the most damning condemnation in the report is directed towards past and present officials at the provincial crown corporation Trade Centre Limited, including former president Fred MacGillivray, who retired in 2009, and current president Scott Ferguson.

“Had Trade Centre Limited not been an active participant in the process of providing cash advances through the Halifax Metro Centre bank account, this activity would not have been able to take place in this manner, much less continue for three years,” writes Munroe.

“Mr. Ferguson has agreed given his experience in the public sector, he should have known these transactions were out of the ordinary and should have asked more questions,” Munroe says in a later chapter. “Documentation suggests Mr. Ferguson was an active participant in the process of issuing the advances on ticket sales for the concerts on the North Common, and the advances in question were, in fact, made with his full knowledge and at least two advance payments were made by Mr. Ferguson without the written approval of Mr. Anstey. In addition, Mr. Ferguson personally signed a number of the cheques.”

Even though the loans to MacKay were made through a city bank account, Ferguson approved $650,000 in loans to MacKay without any approval from city officials, writes Munroe.

Munroe also calls out MacGillivray for Trade Centre Limited’s 2006 takeover of the city-owned Metro Box Office in order to create TCL’s Ticket Atlantic. “There is no documentation available showing the change---with respect to Ticket Atlantic---was officially approved by HRM, Regional Council or the TCL Board,” writes Munroe. “In addition, HRM staff were not advised of this change until after it had occurred.”

Even though TCL unilaterally lifted the ticket sales operation, it kept Ticket Atlantic using the same Metro Centre bank account MBO had used. The result is that TCL and city funds were hopelessly co-mingled; Munroe did not attempt to discover how much the takeover of MBO cost the city, but very likely on-going losses are in the millions of dollars.

And even though TCL claimed the bank account as its own, the loans to MacKay issued through the account were understood to be *city* money, not TCL money. The city was the ultimate chump player in this game---when the province agreed to loan $3.5 million for Paul McCartney’s upfront fee, for example, the money actually came from the Metro Centre bank account, through which the city had also loaned MacKay $350,000. The account was therefore down $3.85 million; had the show been cancelled, the city would have lost double that (both the costs of refunding ticket sales and of backfilling the account), or $7.7 million.

Munroe places ultimate responsibility for the improper loans right back on TCL. “If the available cash relates to advance ticket sales, it must belong to Ticket Atlantic and therefore should only have been released based on the approval of TCL officials,” he writes.

As such, Munroe recommends that the city undertake a legal challenge, presumably against TCL, to recover the lost $395,550.

Even after MacKay failed to pay back the $395,550, he hoped to produce another show on the Common this year. Early in 2011, writes Munroe, "Mr. MacKay wrote to Mr. Anstey and advised he had secured another artist. Mr. MacKay wrote, 'I do have a financing problem which I would appreciate discussing with you.'"

This is a long and detailed story. See the entire report and more analysis at thecoast.ca/bites.

For The Coast's complete coverage of the Common concert financing scandal, click here.

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Monday, June 6, 2011

Concert loan scandal report out tomorrow

The context: Halifax can't be Orlando North.

Posted By on Mon, Jun 6, 2011 at 12:53 PM

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As expected, the city's auditor general's report on the concert loan scandal has been agendized for Tuesday, soon after the 10am start of city council's meeting (item 9.3.1). In public session, with reporters and TV cameras present, auditor general Larry Munroe will make what will likely be a lengthy presentation to council; immediately afterwards paper versions of his full report will be given out, and an electronic version will be posted on the city's website. I'll be there live-blogging via Twitter (@twitcoast), and will report more later.

Munroe's report is titled A Review of Concerts Held on the North Common January 2006 – March 2011, which means that he looked back to the very beginning of the Common concert series, the September 23, 2006 Rolling Stones show. This is good, for several reasons.

First, and most simply, we've never been told the truth about the Rolling Stones show. To this day, we don't know how many people bought tickets for the concert, and if the city provided secret loans to the promoter, Montreal's Donald K. Donald. There's always been something odd about the Stones' show, in that DKD gave up on producing Common concerts after that single show: if The Stones show was really the success we were told it was, why didn't he return for more? DKD's exit made possible Harold MacKay's entrance. In any event, we know that officials straight up lied about the attendance at subsequent Common concerts---essentially allowing the public to believe that ticket sales were twice the real number---so why should we believe the published 50,000 figure for the Stones' attendance?

Second, it means that the report is exhaustive, with regards to the Common concerts. I know that Munroe interviewed dozens of people, including former CAO Dan English, former Trade Centre Limited president Fred MacGillivray, mayor Peter Kelly, promoter Harold MacKay and an assortment of staffers both at the city and at TCL, and that Munroe has obtained every document related to the loans, including the ones I've tried to get without success. I'm assuming that Munroe will tell us why officials thought the concerts were a good idea in the first place, and how the original funding formulas were arrived at. Then, he will tell us how they evolved, and how we got to the absurd point of the city floating the upfront money for a private developer, rather than simply cutting out the cashless middleman and putting on the shows itself.

Third, I don't see how such an exhaustive analysis can be made without examining the role of Trade Centre Limited, both in the formative stage and as manager of the city bank account through which the improper loans to MacKay were made. Munroe might be overly cautious here, but I'm hoping that his report gives details of the tangled TCL-HRM relationship. So far, TCL has managed to insulate itself from the worst of the scandal fallout by putting forward the rather remarkable claim that as manager of the city's money it had no responsibility to vet the appropriateness of any use made of that money. I think we'll see a couple of things in Munroe's report---he'll likely call bullshit on TCL's "We're not responsible" claim, and more important, he'll show that TCL was much, much more involved in the concert business than has been let on, right from the start. It's possible that Munroe will ask provincial auditor general Jacques Lapointe to specifically examine TCL's role in the concerts.

Still and all, Munroe's report is necessarily limited---"I needed a specific starting point," he told me a few weeks ago, explaining that he couldn't examine the entire history of TCL-HRM dealings, which date back to the old city of Halifax and the building of the Metro Centre in the 1980s [correction, 7 June: the Metro Centre was built in 1978; the operating agreement between the city and TCL was signed in 1982.]. I don't fault him here; he's an accountant, not a historian, political scientist or journalist, and he has a specific mandate to look at the concert loans.

But the concert loans should be understood in context of a much broader story about how Nova Scotia decided to become a tourism mecca. There's an elephant in the room that no one wants to talk about, but there's a direct line from the Commonwealth Games fiasco to the Common concerts fiasco to the proposed convention centre.

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