A conversation over breakfast at a Sunset Grill in Vaughan in 2010 became the subject of a line of questioning at the Collingwood Judicial Inquiry this week.
Ed Houghton, former CEO and president of Collus Power continues his testimony today under cross-examination by Judicial Inquiry lead counsel, Kate McGrann.
McGrann began her line of questioning yesterday by asking Houghton why he reached out to PowerStream president Brian Bentz in November, 2010, long before there was a Collus share sale.
He said he reached out for some perspective, and because PowerStream was a large utility close by - the Vaughan company had just merged with Barrie Hydro.
“We, for some time now, had been looking at what we needed to do for the absolute future,” said Houghton. “For us to be able to meet the needs of the future, we needed to do something, and we felt that status quo was probably not that option … we [were] exercising our duty as the chair and CEO of the company to look outward, to look for opportunities.”
Houghton said he had discussions with Dean Muncaster, former chair of the Collus board, and both thought Bentz would be an ideal candidate to provide a different viewpoint on the situation.
Houghton met with Bentz for breakfast in Vaughan at Sunset Grill on Dec. 3.
During the breakfast, Houghton said he and Bentz talked about Collingwood and Houghton’s belief the utility needed to “think about doing something” and challenge the “status quo.”
PowerStream eventually purchased 50 per cent of the Collus holding company to become equal partners in the Collingwood utility. PowerStream’s bid was chosen over three others in the town’s RFP process, part of what is being scrutinized in the Collingwood Judicial Inquiry.
When Houghton initially reached out to Bentz, he said their conversation was “confidential.”
Houghton told the inquiry in his testimony he was trying to keep information that would suggest a change in the ownership or management of Collus confidential from the utility staff.
“Whenever there’s going to be potential change, staff get concerned,” he said.
After the meeting with Bentz, Houghton confirmed he talked to Muncaster about needing to do a valuation of Collus as the “next step.”
Houghton also said he talked about his meeting with Bentz to Sandra Cooper, who was just elected Mayor of Collingwood at the time, (Jan. 2011).
“I basically told her that Dean [Muncaster] and I had been doing a little bit of research looking at what is happening out in the industry … that I reached out to Mr. Bentz … got some information,” said Houghton. “You know, that kind of general conversation, because that’s all it was at that point in time, was very general.”
On January 30, 2011, Houghton drafted a letter for Cooper addressed to the Collus board, specifically the chair, Muncaster.
Houghton’s draft includes a “specific request” for Houghton and Muncaster to undertake a valuation of Collus and to look at the positives and negatives of selling the assets of Collus.
“The request and your review must be kept in strictest confidence,” reads Houghton’s draft contained in the Inquiry’s Foundation Document. “I must also say that this is not a “done deal” that Collus will be sold.”
Muncaster forwarded his draft on to Paul Bonwick, the mayor’s brother, for his input. Bonwick was later hired by PowerStream as a consultant to help with acquisitions of other local distribution companies. Documents obtained by the inquiry show Bonwick also provided advice on PowerStream’s submission during the RFP process to sell 50 per cent of Collus in 2012.
On Jan. 31, 2011, Cooper sends an email to her executive assistant with similar wording to Houghton's draft specifically asking Houghton and Muncaster to undertake a valuation of Collus “examining all potential opportunities that might benefit Collingwood residents and that a report containing recommendations be presented to council by May 30, 2011.”
Cooper’s letter also asks for confidence until she and council receive a report.
There are no minutes showing the Collus board voting in favour of seeking a valuation, but Houghton testified he and Muncaster pursued the action as ordered by the mayor’s letter.
Houghton again reached out to Bentz for recommendations on a consultant to perform a valuation of Collus, and later hired KPMG for the task, with approval from Muncaster as chair of the Collus board. KPMG also helped prepare the parameters of the RFP and a member of the KPMG team was part of the Strategic Partnership Task Team that selected PowerStream as the successful bidder in the Collus share sale.
Houghton’s testimony continued today with further cross-examination by McGrann.
