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Standing Committee on Public Accounts 11 February 2005

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Standing Committee on Public Accounts 11 February 2005 MEETING STATUS: PUBLIC LEGISLATIVE ASSEMBLY SESSION: 62/2 Motion No: PRINCE EDWARD ISLAND Year: 2005 VERBATIM TRANSCRIPT OF HOUSE COMMITTEE PROCEEDINGS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - COMMITTEE: STANDING COMMITTEE ON PUBLIC ACCOUNTS DATE: Friday, February 11, 2005 SUBJECT(S) BEFORE THE COMMITTEE: Further Consideration of the Polar Foods International Audit NOTE: This Transcription has NOT been edited nor subsequently compared with the original tape. It is intended to provide an indication of Committee discussion only and is NOT certified by the Legislative Assembly to be a true copy of the discussion. COMMITTEE MEMBERS PRESENT: Ronald MacKinley, Chair Jim Bagnall, Vice-Chair Wayne Collins Wes MacAleer Wilbur MacDonald Dr. David McKenna Cletus Dunn Hon. Robert Ghiz MEMBERS PRESENT: Richard Brown GUEST: Hon. Mitch Murphy, Provincial Treasurer STAFF: Marian Johnston Standing Committee on Public Accounts Friday, February 11, 2005 1:30 p.m. Guest: Honourable Mitch Murphy, Provincial Treasurer Ron MacKinley (L)Chair: It’s 1:30. Dr. David McKenna (PC): I didn’t adjourn it. Jim Bagnall (PC): What’s the agenda? Ron MacKinley (L)Chair: You did. Not you, but your party. Come on up, Mitch. We don’t go with Ron MacKinley (L)Chair: Honourable Mitch districts anymore. Good to see you, Mr. Murphy, Murphy. I’d like to call the Honourable Mitch that you’re here before us and we’ll try and make Murphy. That’s what’s on the agenda. it as short as possible for you. I’m sure with $125 million debt you have very important things to be Dr. David McKenna (PC): (Indistinct) doing besides being here. Some of your members want to get into an argument but that will be after Ron MacKinley (L)Chair: Not yet. you leave unless there’s some arguments during the debate here. So with that, Mr. Murphy, how Dr. David McKenna (PC): Why not? would you like to proceed? Would you like to make a brief thing or do you want to go into Ron MacKinley (L)Chair: We got Mitch coming questions or what? here and then we’ll schedule after we’re done with him. Hon. Mitch Murphy: Well, I have just a minute or so opening remarks and then it’s up to you, Mr. Dr. David McKenna (PC): We didn’t do it at the Chair, to open the floor for questions, if that’s last meeting so let’s schedule something for next acceptable. meeting. Ron MacKinley (L)Chair: That’s fine. Ron MacKinley (L)Chair: If you guys would stop adjourning the meetings and learn some Hon. Mitch Murphy: Well, first of all thank you rules. Mitch Murphy’s here before us. We invited very much for the invitation to appear this Mitch before us and Mitch doesn’t have time to afternoon. I’m not going to have a lengthily listen to you guys put on a show. statement on the facts and the details of this file. Both the Premier and Minister Currie went into Dr. David McKenna (PC): No show. I want to some detail in their statements before the schedule meetings. committee and I don’t think there’s any need for me to reiterate or restate what they said. But I Ron MacKinley (L)Chair: It will be done at a know the committee is interested in pursuing some later date. lines of questioning on the file for me in my role as Provincial Treasurer and I’d be happy to answer Dr. David McKenna (PC): That’s what you said questions that committee members have to the last meeting. best of my ability. And with that, Mr. Chair, I’ll turn it over to you to proceed the way you wish. Ron MacKinley (L)Chair: But do you understand? Do you read that? Schedule next Ron MacKinley (L)Chair: All right. Cletus Dunn meeting after Mitch is done. has his hand up. Dr. David McKenna (PC): Didn’t do that last Cletus Dunn (PC): I guess, Mr. Minister, just meeting. give us a brief background on your involvement regarding the file, the different roles you played Ron MacKinley (L)Chair: You adjourned it. within the government. 1 Hon. Mitch Murphy: Well, my initial involvement believe I think you have, you’ve read this would be as a member of Treasury Board when document from the Auditor General and the file was started back and the company was throughout the whole document starting in ‘98 I formed back in 1998. believe it shows that there was problems with Polar Foods. So I’m not sure if perhaps you Ron MacKinley (L)Chair: If I could interrupt you weren’t paying that close attention to the file at the for one second. Were you a member of Treasury time or perhaps you were misquoted with what you Board in ‘98? were saying to the Guardian at that time. Hon. Mitch Murphy: Yes, I was. So I’m going to ask a couple of brief questions here just to see exactly what your involvement was Ron MacKinley (L)Chair: All right. with Polar Foods and there’s some areas where I believe you do become more intricately involved Hon. Mitch Murphy: Yes. and that comes around the time when you became Provincial Treasurer after the election when you Ron MacKinley (L)Chair: Continue. were more involved in the receivership process. But in 2002, and it’s in here in Section 6.30, if Hon. Mitch Murphy: So my involvement has you’ve got the document in front of you it’ll help started in 1998 as a member of Treasury Board you go through that, that Cabinet insisted that and obviously as a member of Executive Council directors’ fees be stopped in October of that year. as well. There was a period of time following the You were a member of Cabinet at that time, I 2000 election where my Cabinet Committee role understand, so therefore you must have been part was shifted to Strategic Planning but then I was of that decision. So I’m wondering wouldn’t you back on Treasury Board in 2002 and, of course, consider that somewhat of a telling sign that there following the election of 2003 I assumed the might have been something going wrong with position of President of Treasury Board through Polar Foods if director’s fees were ordered to be my role as Provincial Treasurer. stopped by yourself and I’m just wondering why then did you decide to stop directors’ fees being Cletus Dunn (PC): Thank you. paid in October of 2002? Ron MacKinley (L)Chair: Robert. Hon. Mitch Murphy: A couple of questions. First you raised the Guardian interview so I wish to Honourable Robert Ghiz (L): Thank you very speak to that first. Yes, you’re quite correct. I did much for appearing before the committee today. go over and appear before the editorial board at I found it interesting so far what your role has been the Guardian. I think we were there for in this whole process and I understand the first day approximately two hours and talked about the when the Auditor General’s Report got released it complete file. I did indicate during that interview was yourself and the Minister of Development that the major challenges emerged in 2003 and doing the briefing on it, and as you said your role that’s when the company had experienced, what I has been fairly limited besides the fact you were in felt, was their biggest challenge to date. That is Executive Council and on Treasury Board until you not to indicate that they did not have challenges became Provincial Treasurer. before that. But we must remember this was a amalgamation of a group of companies who had And then I believe the Premier’s office, according grown significantly and were making a significant to the Guardian, sent you over to do an editorial, a contribution to the economy - a company that I Board meeting at the Guardian to which you think at one point had $159 million worth of sales. claimed you didn’t really know that there was any So there were a sizeable force, a major player in problems at Polar Foods until the fall of 2003. the seafood industry on PEI. And when you have And I just want to quote what you said. “ In the fall that type of a business and doing that volume of of 2003 I think that’s when the bells and whistles business, yes, there were years when they had started to go off. People said, well, it’s just not a experienced some losses. But given the assets matter any more of trying to support this company. and the potential capabilities the company had, We better start looking around to see what the were we concerned? Yes, government was other options are.” Now, Mr. Minister, as I always concerned when it’s taxpayer’s money at 2 risk but the major concerns emerged in 2003. transcript, Honourable Member, when the Premier That was the information that I provided to the appeared and when the Minister of Development Guardian. appeared. With regards to the director fees, I believe when Ron MacKinley (L)Chair: Have you followed Minister Currie had appeared before the any of the other information in the papers? committee he had indicated that negotiations with BDI staff and some of the principles involved in the Hon. Mitch Murphy: Just what has been company regarding the director’s fees, BDI had reported in the media, yes. made decisions with regards to trying to help with the internal workings of the company with regards Ron MacKinley (L)Chair: And you only got the to the director’s fees.
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