Tuesday, October 02, 2007

Ralph's Ghost Haunts Alberta

Calgary Blogger Rusty Idols points out;

in any other province the sheer overwhelming profusion of one huge scandal after another would be government killers.

But in One Party State Alberta those in power as King Ralph's henchmen simply give the Nuremberg Defense for their high crimes and misdemeanors. We were just following orders. Along with the other pathetic excuses. Gosh shucks we didn't know. Not our Fault. Don't look back, lets move forward. It's all Ralph's fault.

Like the proverbial three monkeys they saw no evil, heard no evil, and spoke no evil.

The Department of Energy
Royalty Review Scandal.

Murray Smith, the former Energy Minister, went to Washington as a Tory Shill for Big Oil interests. Now he has retired in with a pile of patronage payola, to be replaced by Gary Mar, another former cabinet minister at the trough. And the past Minister Greg Melchin was demoted to Seniors. While the current Minister Mel Knight denies all knowledge of the cover up despite the fact he sat in the inner sanctum of Ralph's world.

Alberta’s auditor general suggested Monday that the province has been the woolly-headed chump of the global oilpatch for years by willingly allowing billions of dollars in royalties to slip through its fingers due to political inaction.

“The royalty resources belong to Albertans,” Fred Dunn told reporters as he released his annual report.

He said Alberta is among the lowest jurisdictions for royalties and has stood still while others moved ahead to charge more as prices in the industry rose.

“Why is Alberta selling it low? What is the support for Alberta to receive less for a similar commodity than other jurisdictions?” he asked.

“There’s good evidence going back to 2004 that the royalty regime was very low. What was needed, really, was just leadership.”

Dunn said that as far back as three years ago, researchers in Alberta’s Energy Department stated that the province’s share of royalties from its giant petroleum industry had fallen below its target range. They also said the government could easily collect an additional $1 billion or more per year without stifling industry profitability.

It even got to the point, said Dunn, that a specific request urging a decision moved up the department chain to then-energy minister Greg Melchin.

Dunn said Melchin, now minister in charge of seniors, told his investigators he decided to not go forward because more study was needed.

“It was paralysis by analysis.”

Overall, Dunn paints a damning picture of the energy department under former Minister Greg Melchin. He says it did not fully meet a single one of the audit's criteria. In particular, the ministry need to do a better job publicly explaining and justifying its work.

As early as 2000, Energy Department staffers were telling senior management that they weren't collecting their appropriate share. Dunn placed the blame squarely on the shoulders of senior management, including assistant deputy ministers, deputy minister and ultimately, Melchin.

Melchin defended his record as minister.

"I'm very proud of the work that we've done and in fact how successful our model has been. On balance I stand behind the decisions made at that time."

While Melchin was energy minister, his department publicly released almost no information about the royalty review and the outcomes. Much of the public information currently available comes from a Journal freedom of information request, which has big portions blacked out or excluded entirely.

That’s despite both Melchin and Klein saying publicly that the government’s studies showed Alberta was getting “a very generous” return, as Klein claimed on June 12, 2006.

"We get enough," said Klein about royalties before welcoming delegates to the Global Petroleum Show in Calgary.

Melchin said today he stands by his decisions, despite the majority of experts having claimed both at the time and presently that Albertans were being shortchanged.

“I was in receipt of that information. I was also in receipt of many other documents, and you have to make sure you look at all of the information available,” he said.

“I think when you realize that you’ve got something that’s going well, one can always look at the model and extrapolate a number. But we also have to look at what made us successful and you don’t lightly change those things.

“I stand by that as the best judgement at the time for Albertans.”

Dunn's audit set out to answer three questions about the province's royalty review systems: Do they exist? Are they well-designed? Do they operate as they should?

His findings paint a damning picture of the Energy Department under former energy ministers Greg Melchin and Murray Smith.

Current Energy Minister Mel Knight said Dunn's report actually reflects well on his ministry. He rejected the idea that his senior staff were negligent in failing to act on the department's internal recommendations. Knight also claimed Dunn, who is employed by the legislature, was airing personal grievances when he criticized the deputy minister.

"It absolutely was a personal attack and I really feel that it wasn't necessary," Knight said.

Evan Chrapko, a member of the government-appointed royalty review panel, said the auditor general's report reaffirms the conclusion that royalty rates need to be increased.

"It's an interesting coincidence that independent reviews conducted with different mandates reached the exact same conclusion given the same set of facts."

Chrapko noted, as Dunn's report concludes, that the government has known for several years that it hasn't received its fair share. All that was needed to rebalance the royalties to the proper level was the signature of Melchin or Smith.

Energy Minister Mel Knight has refused to review any actions taken by the department prior to his appointment earlier this year, despite a scathing report delivered yesterday that identifies "critical issues" by failing to collect billions in past oil royalties.

"We work from today forward. I can’t look back," he told reporters yesterday. "It wasn’t my responsibility at that point."

Would Be Premier Treated Government Credit Card
as Personal Expense Account

And Energy is not the only department Dunn found problems with. Another would be Ralph from last years leadership race; Edmontonian Mark Norris, a single term MLA and Cabinet Minister had his head handed to him by the Auditor General. Rumours abounded about his free spending ways during the Leadership race, and Norris whined about a smear campaign. However as we find out now, the rumours were true.

And while it pales in comparison to billions not collected, it still shows the Tired Old Tories have overspent their welcome. When they view the government and tax payers money as their personal piggy bank.

Norris top aide used gov't credit card to party in Vegas

Nobody in government bothered to crack down on the misuse as the top aide to former cabinet minister Mark Norris racked up more than $35,000 in personal debt on his government credit card, Auditor General Fred Dunn said Monday.

Norris himself was also inappropriately charging items on his government-issued card, Dunn found. Together, he and his executive assistant, Sasha Angus, rang up more than $47,700 in personal charges between 2003 and 2004.

Angus's expenses included a bachelor party in Las Vegas, CBC-TV reported earlier this year.

Norris was economic development minister from 2001 to 2004, before being voted out of office. His aide repaid the $30,000 he still owed government in November 2004, after the provincial election left Norris and Angus jobless.

Angus told auditors that he was never trained to properly use government credit cards, the report says. Dunn didn't buy the excuse.

"People knew what they're to be used for," he said. "They're supposed to be used for government purposes."

Norris was supposed to approve Angus's credit card statements monthly. "Mr. Norris told us that when he received credit card statements and supporting receipts for review and approval, he often approved them without a thorough review," the report says.

Norris claims that Angus paid his credit card expenses;

Norris, who mounted an failed bid to become Conservative leader and premier last year, told The Canadian Press it was "an unfortunate situation" that the credit card given to Angus "got used in that fashion," but he noted that taxpayers weren't affected because Angus repaid it.

Funny though that's not what the Auditor General says.

He rapped Norris's department, in particular. "It's not a good use of the government's senior resources, chasing down assistants for invoices," he said, adding Economic Development was "by far and away the worst."

Of Norris's $45,776.23 total spent on the card between 2002 and 2004, fully $9,466 was spent on "self-disclosed personal expenses". Another $10,500 went towards alleged government expenses with no supporting documentation.

Angus spent $143,426 on his card in the same period. More than half of that did not include supporting documentation, including some $38,291 in personal spending. The government eventually garnisheed his $80,000 annual salary to address repayment.

"The approval process for paying Mr. Angus's card included a review and approval by the minister," said Dunn. "Mr. Norris told us that when he received credit card statements and supporting receipts for review and approval, he often approved them without a thorough review."

And although Norris paid off his charges monthly, his assistant racked up tens of thousands of dollars in debts, including one period in 2004 when his bill reached nearly $30,000 and languished unpaid for months, costing Albertans thousands in interest that was never repaid.

Unfortunately they were not alone in abusing government credit cards. Just the guys with the most expensive tastes. After all this is a government that believes it is entitled to it's entitlements. Sounds familiar, heck some even bought golf balls.

By comparison, Dunn's office reviewed 1,300 recent credit-card transactions in other ministries between 2003 and 2006, and found only 14 of them were for personal use, worth a total of $7,100.

But the audit found also found shoddy paperwork throughout government. If found 383 transactions worth $36,346 that were identified as "gifts." Officials usually gave in receipts, but rarely disclosed who received the gifts and why, the report says.

The auditor eventually reviewed 80 government credit cards and found thousands in expenses that were simply identified as "gifts."

Some spent their money on fridge magnets or golf balls featuring their constituency address. Another bought 160 legislature watches as gifts for overachieving school kids.

In four cases, MLAs used the gift budget to supplement constituency assistants’ salaries to the tune of nearly $20,000.

But in many cases there was “little to no indication” of who received a gift or how the public would benefit.

While the previous stories made news, there are other departments that came under criticism from the Auditor General. And they did not make the news yet. One of those was the Department of Agriculture, a vote gathering slush fund.

The Ministry received $531 million in revenue in 2006–2007.

In 2006–2007, the Ministry spent $1.068 billion.

Its largest expenditures are:
Farm income support $ 573
Insurance $216
Environment and food safety $63
Infrastructure assistance $51
Industry development $46
Rural services $37
Farm fuel distribution allowance $32

The Review of the Department of Agriculture found a bigger boondoggle than just a loosey goosey farm fuel give away program. In fact the departments loans and support payments to farmers has a high failure rate. The department is a net loss, it spends more than it takes in. And fails to assess risk on farm loans it makes. And once again it is a question of failure of any oversight being taken. It in fact lost over $30 million in bad loans. And it could not account for how that happened.

The Agriculture Financial Services Corporation

The Corporation recorded an SLLA of $12.1 million and a GLLA of
$18.5 million at March 31, 2007.

The loan loss allowance is an estimate of the losses that exist in the loan portfolio at a specific time. The loan loss allowance has two parts—the specific
loan loss allowance (SLLA) and the general loan loss allowance (GLLA). The
Corporation records an SLLA for loans it identifies as impaired and a GLLA for
loans at risk of loss, but not specifically impaired.
However, the Corporation’s processes do not ensure that credit risk indicators and security values are updated regularly for all loans.

Account managers update the indicators annually for
commercial loans, through the annual commercial account review. However,
they do not update these indicators for farm loans annually—instead, they
update these loans only if a customer requests additional funds or a loan is

We found that 47% of the Corporation’s loan customers did not have the credit
risk indicators in the lending system. For 54% of the Corporation’s loan
customers, the Corporation had not updated the security values in the lending
system in more than two years.
Other recommendations, the Government can accurately budget but doesn't

Government’s revenue forecasting systems (Vol. 1, p. 142)—government has adequate systems for preparing revenue budgets and forecasts. The government’s actual revenues have exceeded budgets by an average of $5 billion in the last 4 years;

Your privacy is not protected. In fact the computer you are using to read this on is probably more secure than the ones used by the government and its departments. Let alone all those scandals around the loss of private information via contracted out registry services.

Yep Rusty Idols was right any other province and just one of these scandals would bring down the government. But in Alberta the Tired Old Tories simply arch an eyebrow and go back to being asleep at the wheel.

Read the report here.

Transparency Alberta Style

Stelmach the Perfect Strom

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1 comment:

Cliff said...

Thanks for the link - a lot of folks have pointed people my way today.

This whole thing just reminds me of the last line of Jack Nicholson's greatest film:

"Forget it, Jake. It's Chinatown"

It's Alberta. We're on the leading edge of the disaster capitalism future described in Naomi Klein's 'Shock Doctrine' and people don't seem to mind the stench as long as their taxes are low.