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'Total void' of records led former CAO to push for Collus sale details

'I never expected to be involved in a situation anything like this,' ex-Collingwood CAO John Brown told inquiry of his work digging for information on the Collus share sale
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Former Collingwood CAO John Brown was on the witness stand in the Collingwood Judicial Inquiry today.

A former interim chief administrative officer hired following the 2012 Collus share sale, delivered a sharp testimony today outlining his shock and confusion at the lack of access to information about the sale.

John Brown was hired as the interim CAO for Collingwood in July 2013.

By December of 2013, council, in a meeting, had identified four priorities including a governance review, organizational review, and creating a strategic financial plan.

Brown said, out of concern for the town’s finances, he began looking for information on the costs of the town's water/wastewater and IT services provided as shared services by Collus PowerStream.

He testified there was no file kept with the clerk with details and a history of the share sale, and there was no staff member who could explain the whole process and the deal.

“I’ve worked in many municipalities and I’ve never been in a municipality where nobody on staff could sit down and take me through a major transaction,” said Brown. “There’s always someone who can take you through events … The information is stored with the clerk and all you have to do is ask for the file … all municipalities operate on that basis.”

The lack of information concerned him, as he testified there should be someone on town staff who knew the details of the various agreements in order to protect the town into the future of the partnership.

He began asking questions of staff and board members of Collus PowerStream, the town’s lawyers and those who may have been involved in the deal.

“The fundamental question here is, it’s the responsibility of a municipality to keep records,” said Brown. “Why were those records not deposited in the town? Why were they kept in a company that we were now only 50 per cent owner of?”

He acknowledged he was persistent, and some people were “annoyed” by his questions and requests for documents, which he admits he repeated in some cases.

“Why was that necessary?” asked Brown during cross-examination. “Because of the total void of the history of this transaction and all of the matters related to it, including the minutes of the task force and its members. Why were none of those in the town’s archives?”

The task force he was referring to was the strategic partnership task team charged with sending out a request for proposal and choosing a winning bidder for the Collus sale. 

To start, Brown focused on the billing process by Collus PowerStream Solutions to the town for shared services. He was provided with a 2003 document, and said he couldn’t tell if the document was even still legal or applicable to the shared services agreement.

“We wanted to know the costs we were paying represented value for money,” said Brown.

On August 20, 2014, the town and the Collus Public Utilities Services Board - in a joint effort - hired Beacon 2020 Inc. and True North Consultant Inc. to carry out an operational review of the shared services agreement under which Collus PowerStream Solutions provided services to the Collingwood Public Utilities Services Board and the town.

Brown called the undertaking a “value for money audit.”

The ultimate outcome was a report by consultants that suggested terminating the shared services agreement.

This audit and his own line of questions led Brown to start looking further into the details of the share sale.

When he couldn’t find a closing book to outline the signed agreements and conditions, he requested one from Leo Longo, who was the town’s lawyer at Aird and Berlis.

He was concerned about the shotgun clause in the agreement, which was a type of exit strategy to end the Collus/PowerStream arrangement. It was triggered when one party offers to buy the other’s shares. The latter party has the option to turn around and buy the shares of the first party at the same price.

However, the party had to buy the shares within 20 days.

“I was alarmed when I read that,” said Brown. “For a municipality, that would be impossible … municipalities are required to be very public.”

He said purchasing or selling shares would take more than 20 days.

“Someone who doesn’t know how municipalities work put that in there,” said Brown. “There was no way we could even get the value for that and we had no idea what our shares were worth.”

As time went on, Brown said he asked about specific aspects of the deal such as who suggested selling 50 per cent of the town’s shares, where the idea of a strategic partnership came from, how and what information was provided to council, and how the strategic partnership task team was struck and operated through the sale process.

He said the answers he received were not comprehensive.

Fred Chenoweth, the lawyer representing Ed Houghton, president and CEO of Collus PowerStream and Brown’s predecessor as CAO of Collingwood, pressed Brown to explain why he continued to push his questions on staff.

He asked if Brown found evidence of a particular problem.

“It was information I was looking for, not a judgement that something was wrong,” said Brown. “I was merely starting off with the idea that we needed to better understand where our costs were coming from.”

Chenoweth continued his line of questioning.

“If there wasn’t a problem, why did you feel it necessary to push with your questioning to the point it was seriously affecting staff?” he asked. “Why would you do that if there wasn’t a prevalent problem?”

Brown replied: “The answer is: contemporary corporate management is based on good information. I did not have good information.”

In January, 2015, the town hired Miller Thomson - a law firm - to provide a report on issues surrounding the services agreement between the Collingwood Public Utilities Commission and Collus Solutions Corp, the share sale, and related issues.

The report highlighted issues with a service agreement dated 2003 that could still be in force despite a later agreement made in 2012. That meant it was unclear which shared service agreement was actually legally in place.

The report also concluded the share sale occurred without any significant council review or input.

Throughout the process, Brown testified he had doubts about what level of involvement he should take on the issues, and what information he was entitled to.

He said he consulted with lawyers on a few occasions.

“I never expected to be involved in a situation anything like this,” said Brown. “I asked, ‘is this appropriate?’ and I got the advice I should be doing this.”

A number of participants in the inquiry - including Paul Bonwick, Fred Chenoweth (representing Houghton), and Belinda Bain - raised concern to Justice Frank Marrocco over Brown’s testimony, saying his story brought to light some information they would like to pose as questions to witnesses whom have already completed their testimony.

Chenoweth said if he had the benefit of Brown’s testimony earlier in the hearings, he would have posed questions about it to other witnesses.

“We had a ton of people we could speak to,” said Chenoweth. “The Commission has lost the opportunity to do that.”

Justice Marrocco said Brown’s testimony reflected his view of the events.

Marrocco told inquiry participants Brown was on the stand because other witnesses have alleged a “happy relationship” that emerged from the partnership and merger of Collus and PowerStream “became unhappy and dysfunctional,” after Brown took office.

Brown takes the stand again tomorrow at the Collingwood Judicial Inquiry hearing, which starts at 9 a.m. (June 27) at the town hall council chambers.

Following Brown’s testimony, the final witness being called in phase one of the hearings is former councillor Kevin Lloyd.

The hearings are expected to wrap up on Friday (June 28).


Erika Engel

About the Author: Erika Engel

Erika regularly covers all things news in Collingwood as a reporter, photographer and community editor.
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