Contracting Out Is A Crime

Once again the attempt by the Liberals to Reinvent government, the mantra of the neo-con revolution of the nineties, ends up costing Canadians millions. Whether it was the P3 Boondoggle with the Firearms registry, the RCMP pension fund fraud or this case where the Department of National Defense was bilked for millions. It all has to do with contracting out and outsourcing IT functions of the State.

Ex-federal employee guilty of huge fraud

A former defence bureaucrat, who led a jet-set lifestyle, pleaded guilty today to two charges in a phoney contract billing scheme that bilked $146-million out of the federal government before it was stopped.

Paul Champagne, who had been an $80,000-a-year contract manager with the department, pleaded guilty to one count of fraud and one count of breach of trust in an Ottawa courtroom.

He was fired from his job in 2003 after billing irregularities were revealed involving a contract with U.S. computer giant Hewlett-Packard.

After a lengthy RCMP investigation, Champagne, 49, was charged with seven fraud-related crimes. After he pleaded guilty today to two charges, the Crown dropped the remaining five counts.

He will be sentenced in January.

In the late 1990s, the Defence Department issued a series of contracts to Hewlett-Packard (Canada) Inc., eventually paying $159 million for computer maintenance services. The government later discovered it got little or nothing for its money.

The Public Works Department red-flagged the contracts over the four years prior to Champagne's dismissal, but did nothing. A scathing report in 2003 found that managers at the federal government's tendering department failed to appreciate the significance of at least three audits that warned something was terribly wrong with the computer contracts.

After the scandal became public, Hewlett-Packard said it was told by the department to pay a group of subcontractors and their work was deemed secret.

In May 2004, the computer giant repaid $145 million to the federal government, and said its employees did nothing wrong.

Two Ottawa businessmen, Peter Mellon and Ignatius Manso, were also charged, but the Crown said Monday only one case remains to be resolved. A spokesman for the RCMP couldn't say what the status of the cases might be.

Over 10 years, starting in 1993, five contracts worth a total of $250 million were signed with the Compaq Computer Corp., Digital Equipment and Hewlett-Packard, which eventually bought Compaq.

Audits conducted by Public Works in 1999 and 2000 raised concerns about three of the contracts, but in 2001 a further review found unauthorized billing and "evidence of contractual funding appropriated for other purposes."

After Champagne was fired, National Defence did its own internal review of contracts and discovered problems with two dozen other projects. Today, the Defence Department did not respond to requests for comment about what safeguards have been put in place to prevent a repeat of the fiasco.

At the time of his arrest Champagne was a multimillionaire, who insisted his wealth and homes in exclusive districts of Ottawa, Florida and the Turks and Caicos were the results of shrewd investment in high-tech stocks during the tech boom of the late 1990s.

SEE:

Defense Lobbyist Now Minister

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Another Privatization Failure

Here is another sad story of a Canadian city attempting to reinvent government; the neo-conservative experiment in the private delivery of public services.

As in how much is this going to cost us if it fails?!

Ultimately its failure will cost taxpayers more, which always gets swept under the rug when privatization is initially pushed as low cost alternative to the public sector delivery of services.

OC Transpo, which is owned and operated by the city, contracted-out Para Transpo to First Bus, a private company that specializes in outsourcing public transit.

Except, I now understand, where there's no profit in it. First Bus, along with the rest of the private sector, isn't interested in providing the service.

And we will be left wondering what Ottawa's public transit for the disabled could have looked like if, instead of providing profits for Laidlaw and First Bus, we'd directly invested that money in the service over the last ten years.

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Free Trade=Cheap Wages

The truth is in reading the fine print. Free Trade is not about trade, or sustainable markets, it is about off-shoring production and contracting out services.

India also offers Canadian companies another cheaper-wage locale besides China where they can shift production to save money and remain competitive.

This little fact will get lost in the hoopla that will be generated around a bilateral free trade agreement between Canada and India.



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Nortel Slash & Burn

Since the nineties Nortel has been cutting its workforce and shipping jobs off shore, 56,000 workers cut, and it still has not gotten it out of its fiscal spiral downwards. Why should this be any different.

Nortel to slash 2900 jobs in latest cost-cutting

Nortel Networks Corp. will slash 2,900 jobs, or 8.5 percent of its workforce, over the next two years and shift another 1,000 employees to lower-cost locations like China, India and Mexico as North America's biggest maker of telephone equipment struggles to shore up its profits.Nortel, which currently employs about 34,000 workers, said on Wednesday This is the latest round of job cuts at Nortel, which once employed about 90,000 people. Last June, the company said it would cut 1,100 jobs and alter its pension plans in an attempt to contain costs.

The layoffs are the latest in a series of cost-cutting moves made by Chief Executive Officer Mike Zafirovski since he took over the beleaguered company in November of 2005. Since the collapse of the telecom and “dot com” markets in 2001-2,
Nortel has cut more than 60,000 jobs.

As usual let's look at how much the guy at the top makes while his company bottoms out and he slashes jobs.

	Nortel Networks Corp.(1)	Zafirovski, Mike	$37,429,297
Salary: $305,785 Bonus: $0 Subtotal: $305,785 % chg Other: $28,698,591 Share Units: $8,424,921 Option Gains: $0 TOTAL: $37,429,297 New option grant: 5,000,000 ($10,695,000) Industry: Information Technology Legend

And the reason for Nortel's collapse was not productivity nor the crash of the dot.com bubble but criminal capitalism.

Nortel CFO Leaves (Again)

Nortel chief financial officer Peter Currie is stepping down this spring to take on "new challenges."

The company announced Tuesday that Mr. Currie will be stepping down on April 30 of this year, although he will continue to provide advice to the company to ensure a smooth transition.

Currie took over the CFO chair one year ago to help Nortel recover from several years of financial scandals and mismanagement. Between February 1999 and April 2004, two of the three men who held the title of Nortel CFO were fired for cause.



See

NORTEL: REDUX

NORTEL: Canada's Enron

Criminal Capitalism

We Need a Living Wage

The Phoney Debate On Net Neutrality

CEO


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