Canadian Press
Toronto Star
February 24, 2004

Revelations about rich Hydro One contracts going to friends of Ontario’s former Conservative government prompted cries of cronyism today and a fresh pledge from the province’s energy minister that corruption at the public utility will be rooted out. Dwight Duncan called it "sickening" that prominent Tory advisers close to former premiers Mike Harris and Ernie Eves won untendered contracts worth $5.6 million while the Conservatives were still in power in 1999.

"The people of Ontario can be assured that this kind of nonsense is not going to happen again," Duncan said in an interview.

"There are a number of options I have available to me in terms of reviewing what’s gone on in the past. . . . We are going to make sure these organizations are run as public utilities."

The contracts went to Leslie Noble, the co-chair of the Conservative election campaign; Paul Rhodes, communications director of the election campaign; Michael Gourley, a close adviser to Eves; and Tom Long, a senior Conservative strategist.

They included monthly payments of up to $40,000 for corporate entities associated with Gourley, $15,000 to Rhodes, and $13,000 for Noble.

Rhodes collected $335,000 for 18 months of work, but also included was a lump sum of $56,000 for what the utility said was "strategic communications advice."

Noble’s firm, StrategyCorp Inc., received $250,000 – a bargain considering the work that was involved, said John Matheson, one of the firm’s partners.

"It was a major piece of work on an important policy file which we invested substantial resources of people and time into over a period of time," Matheson said.

The contract included a number of "accountability checkpoints" for Hydro One to ensure they were getting value for their money, he added.

"They got quite a good deal from us."

Rhodes, who signed his deal in 1999 after the Conservatives were re-elected to their second straight majority government, said there was nothing untoward about his contract, either.

"I was approached as a communications consultant; they had, as a new company, some work they needed to have done on strategic communications," he said.

"We had a negotiation for a contract, came to an acceptable agreement and I started working for them. It’s no more complicated than that."

NDP house leader Peter Kormos, however, drew direct parallels with the sponsorship scandal currently rocking the federal Liberal government and even called on the province to solicit the help of federal Auditor General Sheila Fraser.

"It would be appropriate for her to be called in to examine these so-called contracts . . . and to determine whether or not there’s criminal conduct involved," Kormos said.

"If there was wrongdoing, the money’s got to be paid back. If there was wrongdoing, people should risk going to jail."

Jim McCarter, Ontario’s acting auditor, said Fraser has no jurisdiction in Ontario adding that he himself can’t act until asked to by the legislature’s public accounts committee.

New legislation that’s expected to pass in the spring would give the auditor’s office the power to conduct unilateral value-for-money audits where deemed necessary, he added.

Asking the auditor to investigate is one of the options on the table, said Duncan.

It was the new Liberal government that passed legislation last year making Hydro One and Ontario Power Generation subject to the province’s freedom of information laws, Duncan noted.

The contracts were all issued in 1999 and the last one ran out in 2002, said Les McKay, vice-president of Hydro One’s executive office. Most were doled out under executives who are no longer with the company, he added.

"They aren’t associated, for the most part, with the current management team."

The company has policies in place that govern the issuance of contracts and ensure that proper steps are taken to ensure value for money, he added.

"We are rigorously conforming to those."

Tom Adams, who heads up Energy Probe, an Ontario-based utility watchdog, said the contracts are indicative of the "corrupt system" which has long governed Canada’s largest public utility.

Adams also drew comparisons with the sponsorship scandal.

"In both cases, Crown corporations are being used as conduits for what’s effectively public funds for the benefit of friends of the premier."

One of the contracts showed that Egon Zehnder International, a headhunting firm where Long is a senior official, received $83,000 to recruit Deb Hutton, an adviser to Harris, to work at the utility as its vice president of corporate relations.

Hutton defended her decision to solicit the help of Long’s firm, one of several she contacted after deciding to leave politics in 1999.

"Mr. Long is a friend of mine, and on a personal level, like other friends, I certainly keep him posted about what I’m doing with my life," Hutton said in an interview.

"It would be silly to suggest that I wouldn’t chat with him about my future; the man is also in the business and is a professional, so of course I would speak to him."

Hutton’s expenses at Hydro One have also made headlines in recent months; during 2001 and 2002 she spent $4,900 dining at Toronto restaurants with prominent Tories, who were in government at the time.