Saturday, January 29, 2011

Putting two and two together

Last week, this blogger broke stories on how the Vancouver Olympic committee cancelled its final instalment of bonuses for certain workers and that the Department of Canadian Heritage found discrepancies in the use of federal taxpayers' funds by VANOC.

Canadian Heritage was the ministry that oversaw federal involvement with and funding of the Olympics. The October 2010-dated audit document was itself dated Dec. 8, 2010. It appeared on the Canadian Heritage website's audits and evaluation section very quietly, after Christmas... after the Dec. 17, 2010 VANOC post-Games financial report and after the Dec. 23, 2010 Government-wide Canada's Games report. The latter report did not answer a key question: how much did the feds spend?

Canadian Heritage didn't find any improprieties and made no recommendations to VANOC. But the auditors who went over VANOC books last May and June and found $10 million in accounting discrepancies that needed adjusting. They were unable to look at how ceremonies producer David Atkins used almost $500,000 because the files were in Australia.

Canadian Heritage Minister James Moore was "not available" according to his press secretary. VANOC chief financial officer John McLaughlin did not respond directly to my queries about the cancelled bonuses or the Canadian Heritage audit. But if VANOC had to rejig its books after the audit, it may be reasonable that the first place it turned was the trust fund that contained those bonuses.

A trust fund that was reported quarterly in 2008 and 2009, but mysteriously not in the only report issued in 2010.

Here is the Canadian Heritage audit.

Canadian Heritage VANOC audit, October 2010

Thursday, January 27, 2011

Bonuses that go bust and disappearing trust

VANOC deputy CEO Dave Cobb (left) and chief financial officer John McLaughlin at the Dec. 17, 2010 news conference. The post-Games financial report was released and a key element was missing: information about the Employee Completion and Performance Plan. Ex-staffers were surprised to learn Jan. 6, 2011 that the final instalment of bonuses was axed.

Number two on the list of the five corporate values adopted by the Vancouver 2010 Winter Olympics organizing committee was “trust”.

According to Webster, trust is defined as:

1 a: assured reliance on the character, ability, strength, or truth of someone or something; b: one in which confidence is placed
2 a: dependence on something future or contingent : hope; b: reliance on future payment for property (as merchandise) delivered : credit
3 a : a property interest held by one person for the benefit of another; b : a combination of firms or corporations formed by a legal agreement; especially : one that reduces or threatens to reduce competition
4 archaic : trustworthiness
5 a (1) : a charge or duty imposed in faith or confidence or as a condition of some relationship (2) : something committed or entrusted to one to be used or cared for in the interest of another.

VANOC disclosed in its report for the year ended July 31, 2008 that it created a trust on July 1, 2008 “for the purposes of holding certain of the assets of the Employee Completion and Performance Plan [the “Plan”]. Employees were to be rewarded, based on length of service and seniority, once when they finished their assignments and again several months later.

“The purpose of the Plan is to support the retention of employees through to the end of the term of their employment agreement (“completion entitlement”) and reward achievement of organizational performance results. The purpose of the Trust is to hold the contributions to be made by VANOC relating to the completion entitlement of eligible Operations employees. VANOC has accrued $8,600 at July 31, 2008 related to the completion entitlement, which will be paid into the Trust once the Trust has been fully set up. Transactions between VANOC and the Trust will be measured at fair market value at the date of contribution. VANOC has an economic interest in the Trust as it is a named beneficiary together with the eligible employees, and is entitled only to the interest, capital gains and dividends earned on the Trust’s assets.”

By Oct. 31, 2008, VANOC “accrued” $9.8 million. Another $731,000 was added by Jan. 31, 2009 when it stood at $10.601 million. By April 30, 2009, it was $14.534 million.

Three months later -- when the fiscal year ended July 31, 2009 -- the “fair value of the trust’s assets” was $16.3 million.

The last citation was in the Dec. 21, 2009-released report for the period that ended Oct. 31, 2009 when the trust was worth $17.774 million.

There was no mention in the Dec. 17, 2010-published, post-Games financial report.

On Jan. 6, 2011, ex-employees were notified via an email memo from chief financial officer that there would be no final instalment of the staff bonuses. Happy new year!

One trust disappeared and another trust was broken.

That's how it ended. How did it begin?

VANOC planned to reward staff with bonuses, so as to prevent an exodus in the months before the 2010 Winter Olympics. The $44.576 million in the May 2007 business plan and budget for "additional compensation costs" was branded a "slush fund" by then-NDP Olympics critic Harry Bains.

The story had a second go-round in October 2009 when the $30 million Employee Completion and Performance Plan caused VANOC to go into damage-control mode while preparing for the Olympic torch relay.

"This helps us reassure our employees -- particularly in the face of a challenging economy -- that they can complete their commitments without the pressure of trying to find a new job or being recruited in the final months before the Games," said a prepared statement from deputy CEO Dave Cobb in October 2009.

Shortly after he arrived at Olympia, Greece's Amalia Hotel for the Oct. 22, 2009 torch-lighting, CEO John Furlong mentioned that he paid a visit to the publisher of The Vancouver Sun (a VANOC sponsor and no relation to Sun Media) to express his dismay at the paper's coverage of the issue. It was an insult to the hardworking men and women of Vancouver 2010, Furlong said.

It's no surprise that the bonuses went bust. We eventually found out a week before Christmas 2010 that VANOC got a $187.8 million bailout from taxpayers in order to show a balanced $1.884 billion operating budget. No taxpayers' money was supposed to be used for operations. But the recession happened and VANOC was not prepared. Dollars were being shifted from department to department and account to account. Because of one of my sources, we now also know that employee bonuses were a casualty.

Certainly there may be some ex-VANOC workers who qualified for a bonus who may be feeling jilted about the post-Christmas memo. But there are many more taxpayers wondering: Why didn't VANOC talk about this? It's evidence that the organizing committee made sacrifices like the rest of us.

Ken Dobell, the chair of the finance committee, did not want to comment. McLaughlin did not directly reply to my queries. Spokeswoman Renee Smith-Valade claimed to be conveying a message from McLaughlin that:

"Page 8 of the final financial report indicates that compensation costs totaled $308.3 million across the organization for the duration of the project and that these costs were embedded in the reported cost of each division. The funds paid out of the trust were included in this total as they were part of the compensation costs."

Not good enough. Show me.

This begs some simple, reasonable, key questions for VANOC.

1) What was the financial standing of the trust from Nov. 1, 2009 onward?

2) After diligently reporting the evolution of the trust since it was established, why was it omitted from the final report? (If you’re an eligible ex-VANOC employee, you are a beneficiary and have the right to ask for the statements of this trust.)

3) Was auditor Ernst and Young supplied sufficient information about the state of the trust after Oct. 31, 2009?

4) Finally, what else are you hiding from Vancouverites, British Columbians and Canadians?

As usual, I gladly accept answers at and even plain, brown envelopes at 554 E. 15th Ave., Vancouver, B.C. V5T 2R5

Monday, January 24, 2011

Treasury Board presidents say the darndest things


Stockwell Day is an enigma wrapped in a riddle.

He was unfairly ridiculed for showing up at a news conference in 2000 riding a Jet Ski. Canadians need more politicians arriving for events aboard alternate means of transportation. I'm not a politician, but if I had a Jet Ski that's how I'd arrive for work.

He was leader of the Canadian Alliance, which was oh-so briefly called the Conservative Reform Alliance Party until someone realized it literally stood for CRAP. That's also what his supporters were saying after losing the 2000 election to the Jean Chretien Liberals. During that campaign, he was mocked for his creationist beliefs.

On Jan. 19, 2010, he was sworn-in as president of the Treasury Board. Here is his job description.

"The Treasury Board is responsible for accountability and ethics, financial, personnel and administrative management, comptrollership, approving regulations and most Orders-in-Council.

"The formal role of the President is to chair the Treasury Board. He carries out his responsibility for the management of the government by translating the policies and programs approved by Cabinet into operational reality and by providing departments with the resources and the administrative environment they need to do their work. The Treasury Board has an administrative arm, the Secretariat, which was part of the Department of Finance until it was proclaimed a department in 1966."

Day is also the senior cabinet minister for British Columbia.

So who better to ask than Day himself a simple question: how much did the federal government spend on the Vancouver 2010 Winter Olympics?

The City of Vancouver and Province of British Columbia issued post-Games reports disclosing their expenditures. The Government of Canada has not.

Maybe you saw a report on Dec. 23, 2010 called Canada's Games. Conveniently released the day before Christmas Eve. That document purportedly told the story of the federal government's involvement in the Olympics. Flip to the financial chapter and you'll find the government's estimate of $1.247 billion "invested". But look closely at the page 127 disclaimer. It says the following: "All dollar amounts in this report reflect budgets and not actual figures".

So here we are in 2011 and still wondering about the cost of the Games. Here's Day's answer to my simple question at a Jan. 21 news conference on scientific research grants at the University of B.C. Robson Square:

"Everything, every dollar, every dime that we've spent has been and is fully audited and all numbers are available.

"The overall report showed that the Olympics themselves wound up in a net surplus position. Fantastic what is left here as a legacy, not just in terms of training centres and all the magnificent infrastructure projects that we have now, but of course the legacy of accomplishment itself.

"The numbers are out there and if there's a particular element that you haven't got or haven't been able to get, by all means give me a call.

"The overall Olympics have been audited, we're very happy that it's turned out an overall surplus position.

"There's some cases because there's so many organizations and groups that you collaborate with and work with, we're actually still waiting for receipts."

Excuse me, Mr. Day?

A net surplus is defined as profits remaining after operating expenses, taxes, interest, insurance and dividends. The word "surplus" appears only once in the Canada's Games report in reference to surplus medical and dental supplies donated to earthquake-ravaged Haiti.

Again, I direct your attention to the disclaimer on page 127:"All dollar amounts in this report reflect budgets and not actual figures."

VANOC, which organized the Games, had no profit. On Dec. 17, 2010, it claimed it balanced a $1.884 billion operating budget, but only after an infusion of $187.8 million from taxpayers. In May 2007, CEO John Furlong said no money from taxpayers would be needed for operations.

So, will the Treasury Board president kindly give us a straight answer? How much did the federal government spend on the Vancouver Olympics?

(P.S.: In case you'd like to call Day yourself, his numbers are 613-957-2666, 613-995-1702 or 1-800-665-8711.)

Sunday, January 23, 2011

WikiLeaks: Cuban boxers and their Pan Am defection bid

Whenever there is an international multisport event that includes athletes from a country where human rights or economic conditions are sub-par, then there is likely to be defections.

That's what happened at the 2007 Pan American Games in Rio de Janeiro where Cuban boxers decided they didn't want to go home to Castro-stan in the Caribbean.

Here is a United States embassy cable published by WikiLeaks on the topic. Find another one at this link.

Reference ID Created Released Classification Origin
07BRASILIA1715 2007-09-11 15:03 2011-01-18 00:12 CONFIDENTIAL Embassy Brasilia

DE RUEHBR #1715 2541550
R 111550Z SEP 07



E.O. 12958: DECL: 09/10/2017

Classified By: Political Counselor Stephen Liston, reasons 1.4 B and D

¶1. (C) Summary. A delegation of Brazilian federal deputies could travel to Havana soon to learn more about the Cuban boxers who were returned to Cuba during the PanAm games after apparently trying to defect and then undergoing a change of heart. The deputies would try to see the boxers to determine whether they have suffered any retaliation from the Cuban government, but the president of the Brazilian Chamber of Deputies may not allow the trip for budgetary reasons. Although the opposition is keeping the incident alive in the press, its criticism of the GOB has not resonated much outside of congress. End summary.

¶2. (C) Deputies from the Chamber of Deputies Foreign Relations and National Defense Committee (CREDN) could visit Cuba in September to gather information about the circumstances of the return of two Cuban boxers who competed in the PanAm Games last July, then apparently tried to defect, but suddenly changed their minds. Last week, the CREDN approved a resolution on the Cuba trip, but an adviser to Arlindo Chinaglia, president of the Chamber of Deputies and a member of President Lula's Workers Party, told us that Chinaglia, as Chamber president, must approve all official foreign travel and might well disallow this trip for budgetary reasons. The adviser said politics would not be an issue in the decision and that the presidential palace was not likely to pressure Chinaglia to block the trip. However, the CREDN chairman has already traveled extensively, and the Chamber is facing growing budgetary constraints.

¶3. (SBU) When the boxers, Guillermo Rigondeaux and Erislandy Lara, asked to go home after having gone missing, Brazilian authorities quickly facilitated their request and sent them away on a Venezuelan aircraft reportedly chartered by the Cuban government. Intense congressional and media attention in the aftermath raised questions about the actions of Brazilian authorities and the circumstances leading up to the boxers' return. Press reports described a scenario in which the boxers may or may not have had a drunken night out on the town, decided not to return to Cuba, discussed contracts with a German promoter, applied for visas to Germany, then suddenly changed their minds and told Brazilian Federal Police (PF) they wanted to go back to Cuba. Local press reports said Rigondeaux and Lara had felt pressured after family members in Cuba told them by phone that the government had reduced their food rations and were threatening to expel them from their homes. The PF, which is under the Justice Ministry, arranged their immediate return. Both houses of congress have called GOB officials to testify on their actions; Justice Minister Tarso Genro defended the government,s actions as being totally within the law, and noted that other Cubans who sought asylum have been allowed to stay (note: Rafael D'Acosta Capote, a handball player, and Lazaro Lamelas, a coach). Foreign Minister Amorim is due to testify later this month. Members of congress continue to spar over whether the GOB did the right thing and whether Brazil complied with international norms of behavior.

¶4. (C) Comment. Although it remains unclear at what level decisions were made in the GOB, and what role the Cuban government played, it seems most likely that the Justice ministry did not look behind the boxers' sudden change of heart, and simply took the path of least resistance. The Ministry of External Relations's unusual public statement after the event, in which it denied any part in the decision, seems to support this view. By operating in its usual conflict-avoidance mode and trying to rid itself of a potential problem, the Brazilian government may have brought on itself unwelcome scrutiny from congressional oppositionists who might wish to show the government acting against freedom-loving Cubans. The proposed congressional trip is the latest gambit by congressional opposition to keep the Cuban boxers incident alive. So far, however, the effort does not seem to be resonating much outside the halls of congress.


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