December 1, 1998

Crawford: Morin crony violated post-employment rules

Former bureaucrat Roland Bailey won four lucrative GNWT contracts less than a year after resigning. Conflict of Interest Commissioner Anne Crawford found that FMBS chair John Todd is accountable.

JIM BELL
Nunatsiaq News

IQALUIT — Roland Bailey, a former secretary to the NWT cabinet, was in violation of the GNWT's post-employment rules for civil servants when he entered into four GNWT contracts in 1996 and 1997, Conflict of Interest commissioner Anne Crawford has found.

Crawford found that John Todd, the minister responsible for the GNWT's Financial Management Board Secretariat, is accountable for the government's failure to enforce those rules.

Retired civil servants must wait at least one year before entering into contracts with the GNWT, unless they are granted a waiver.

"Minister John Todd, Minister of Finance and Chairman of the Financial Management Board, testified that he did not know it was his responsibility to enforce the policy, nor did he know what was being done about enforcement," Crawford said in her report into conflict of interest allegations against former NWT Premier Don Morin.

The FMBS is responsible for enforcing the provisions of employment contracts, Crawford said.

"If selective enforcement of the policy creates a problem for government, it is to the Minister responsible [for the FMBS] that those who seek accountability should look," Crawford said

Iqaluit MLA Ed Picco, who first raised the issue of Bailey's contracts with the GNWT last February, says he will again ask cabinet about why Bailey got work with the government so soon after he resigned.

"The point is he never was opted out, so that means they never followed their own policy. So what's the point of having a policy if you're not following it?" Picco said.

Bailey, who Crawford describes as a "friend" of Morin, served as deputy minister of economic development from October, 1992 until December, 1995.

Top civil servant

After Morin became premier in the fall of 1995, he recruited Bailey for the job of Secretary to the Cabinet and Deputy Minister of the Executive.

That's the highest ranking civil service post in the territorial government.

But Bailey wasn't happy with his powerful new position, which he described as "the worst job" he ever had. Bailey then gave notice to Morin that he wanted to leave in April of 1996.

Despite widespread rumours that Bailey had already quit, Bailey didn't actually leave the GNWT until October 4, 1996.

Only three days later, Roland C. Bailey and Associates, his consulting firm, won a contract to manage the first of two GNWT immigrant investor funds.

On June 16, 1997, Bailey won a contract to manage investments for the GNWT's second immigrant investor fund, known as Aurora Fund 2.

Bailey testified at the inquiry that he now earns about $3,600 a month in commissions for his work on the immigrant investor funds, minus office and other expenses.

In addition to that contract, Bailey won a $250,000 job on April 17, 1997 to produce a report on the proposed privatization of the GNWT's Petroleum Roducts Division.

In February of 1996, while Bailey was still secretary to cabinet, cabinet ministers decided that the GNWT's petroleum products division should be privatized. In July, Bailey had access to a cabinet decision paper setting out the GNWT's proposed approach to the plan.

Used inside knowledge

Despite Bailey's assertions to the contrary at the inquiry, Crawford says Bailey used knowledge gained as a government employee to gain an advantage in bidding on the PPD contract.

"On the basis of Mr. Bailey's testimony on this point, I find that there is an inevitable conclusion that Mr. Bailey had gained knowledge relevant to the petroleum contract while he was a government employee and that use of that knowledge would and did provide a significant advantage in bidding for or performing a contract in respect to the privatization of the PPD," Crawford said in her report.

The most controversial contract that Bailey won was the now-infamous lease extension on the Lahm Ridge Tower office building in Yellowknife.

In a partnership with businessman Milan "Mike" Mrdjenovich, Bailey bought the Lahm Ridge Tower building from its previous owner, Al Marceau, and then helped negotiate a new long-term lease on the building with the GNWT.

Mrdjenovich built a three-storey, six-bedroom monster home for Morin that Crawford estimated to be worth just under $500,000. Morin paid $2,800 a month for the house, out of his tax-free ministerial allowance for housing.

In July of 1997, Marceau had agreed that Bailey and Mrdjenovich could negotiate on his behalf with GNWT officials for a new Lahm Ridge Tower lease.

Marceau had been unable to get a long-term lease extension, and until Bailey and Mrdjenovich entered the picture, GNWT officials had little or no interest in providing one.

Crawford found that in the Lahm Ridge deal, Bailey was in a position to exploit knowledge and contacts he had acquired as a government employee.

"The web of circumstance surrounding the lease of Lahm Ridge Tower is an example of precisely the type of conflict-ridden situation that a government adopting post-employment policies for senior officers is trying to avert," Crawford said in her report.

"The lease extension with the Government of the Northwest Territories was a violation of Mr. Bailey's contractual post-employment obligations."

Relationship with Ferne Babiuk

Besides his friendship with Morin, Bailey enjoyed another close link to Morin — his relationship with Ferne Babiuk, Morin's most trusted political advisor and the Principal Secretary to the premier.

Babiuk described Bailey has her "room-mate" and "best friend." They have shared living quarters in Yellowknife for the past five or six years.

"It is clear from the evidence that Mr. Morin was aware of the relationship between two of his most senior advisors. However, there is no indication that he took any steps to address any potential conflict or appearance of conflict that might arise from that relationship," Crawford said in her report.

Crawford said, however, that Babiuk removed herself from any discussions on the Lahm Ridge Tower deal as soon as it became a political issue.

As premier, Morin wasn't responsible for enforcing Bailey's post-employment obligations, Crawford said.

And she said that Morin even offered to write a letter for Bailey

"I purposely restricted myself from bidding on any contracts where I had knowledge that I had gained as a civil servant that I could apply and that would be contrary to that restriction, so I never, ever requested the letter," Bailey told the inquiry.

But Crawford said that on cross-examination, he admitted discussing matters connected to those contracts while he was still in government.

Crawford concluded that, in his dealings with Bailey, Morin did not do enough to ensure public confidence in the integrity of the government.

"All these factors taken together amount to a serious perception problem, for which the Premier is personally responsible. In failing to deal with that problem, he has not arranged his affairs in a manner to maintain public confidence," Crawford said.

That includes a free fishing trip to Plummer's Lodge that Roland Bailey arranged for Morin in the spring of 1997, Crawford said.