Board Appointments
Mr. Steve Ashton (Opposition House Leader): Madam Speaker, I rise on a matter of privilege, and it relates directly to the contempt shown to this Legislature not only by the minister responsible for MTS but by the Premier (Mr. Filmon).
I would like to table a copy of the Order-in-Council that was signed by Eric Stefanson, the minister responsible for MTS, also signed by the Premier. It outlines, contrary to what the Premier said on Monday when he pointed to four government appointees, the current four, and what the minister said yesterday when he tried to use the same line to duck the fact, that on January 7 he appointed by his signature a board of 11 directors, the interim board, which included his brother, which included one D. Samuel Schellenberg, the person who was responsible for the compensation committee.
I also want to table a copy of the information circular that was filed by Manitoba Telecom Services Inc. which indicates that as of April 14, well before the meeting that they keep referencing, they already had agreement to the compensation package and it had been approved by the three major stock exchanges. I want to table that as well and point to the fact that this minister responsible for MTS still does not get it. He appointed his brother to the interim board. He appointed by his own signature. The First Minister signed that. He appointed the 11-person board which became the slate, the interim board, also people that they are very well aware of. This slate, this board, the interim board was the board that developed the compensation package which, surprise, surprise, ended up with Tom Stefanson getting a million-dollar stock option program. If the Minister of Finance and the Premier do not understand that is unethical, Madam Speaker, they do not understand what ethics are about.
We asked on Monday; we asked on Tuesday; we asked again today, and we gave the minister responsible for MTS the opportunity to clarify the record, to tell the truth to Manitobans. I say, Madam Speaker, we have no choice as a Legislature other than to find that minister in contempt. If he does not understand what is wrong with being the minister responsible for MTS appointing his brother, who ends up getting a million-dollar benefit at the end, we have serious problems.
That is why I move, seconded by the member for Concordia (Mr. Doer), that the matter of the Premier (Mr. Filmon) and Minister of Finance (Mr. Stefanson) showing contempt for the House by deliberately making misleading statements concerning the unethical appointment of Thomas E. Stefanson to the board of directors of Manitoba Telecom Services, allowing Mr. Stefanson and other directors to enrich themselves through a multimillion-dollar compensation plan, be referred to the Committee on Privileges and Elections.
Hon. James McCrae (Government House Leader): Madam Speaker, the honourable member for Thompson has for I do not know how many times raised questions of privilege in this House related to the privatization of the Manitoba Telephone System. He fails on both the grounds that are required to be met with respect to questions of privilege. The issue of timeliness, it is clear he has failed on that one. With respect to a prima facie case, it is a common occurrence in this House that honourable members on each side of the House see things in a different light. That in no way amounts to a question of privilege. In fact, it is a good thing. If we did not have that, we would not have the kind of democracy that we have in our country.
But that said, on the prima facie matter of making a case of privilege, the honourable member has totally failed to prove anything except--or to bring forward prima facie anything other than a difference in the way he sees things and in the way the honourable Minister of Finance (Mr. Stefanson) and honourable members on this side see things.
What we are involved in, and I think honourable members opposite sometimes show some expertise in this area, is a matter of spin, and the honourable member for Thompson has spun every which direction he could ever since the fall of 1996. He is in a time warp. He cannot get over the events of those days. When this House agreed on certain courses of action, and just because the honourable member's party thinks that it should be able to rule this House and cannot, they feel they have to raise a question of privilege on every occasion they can. They simply do not get it, to repeat the honourable member for Thompson himself, they do not get what democracy is all about. Democracy allows Legislatures to speak and honourable members would like to stifle this Legislature.
Some Honourable Members: Oh, oh.
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Madam Speaker: Order, please. A matter of privilege is a very important matter, and I would ask for the co-operation of all honourable members in listening to the advice that is being provided to the Chair. I am experiencing great difficulty in hearing some of the comments of the honourable government House leader. Was the honourable government House leader finished?
The honourable government House leader, to complete his remarks.
Mr. McCrae: I had virtually concluded because there is business that needs to be done in this House, and the honourable members opposite cannot seem to get over the circumstances in which they find themselves. I know that the honourable Minister of Finance has something to say as well, and I have indeed concluded.
Hon. Eric Stefanson (Minister of Finance): Madam Speaker, the member for Thompson has no matter of privilege and I want to remind him and his Leader and members opposite of some of the things I said on Monday. The suggestion about the awareness of the circular on April 14 and the annual shareholders' meeting in 1997 on Monday in this House, in response to a question from the member for Crescentwood (Mr. Sale), I said very clearly: "I am certainly prepared to undertake to provide members opposite with information from the circular providing information on the stock option plan, obviously minutes of the shareholders' meeting that was held on May 30, 1997, ratifying a stock option plan for MTS." I am certainly more than prepared to provide that information, which is public information, by the way.
I go on again in responding to the same member, again referring in fact in that circular that was distributed almost a year ago: "it says very clearly in the circular, for the benefit of the member for Kildonan (Mr. Chomiak)," at that time, "that on the recommendation of its human resource and compensation committee, the board of directors of the corporation has approved the implementation of a stock option plan."
That is the sequence of events that took place in 1997. At a shareholders' meeting, I believe on May 30 of 1997, a board of directors was elected; seven of those board members were elected by the shareholders, by the some 70,000 shareholders, a majority of them Manitobans. We as a government at that point in time appointed four members, on many occasions read into the record who those members were, and we have never in any way put any false information, any incorrect information, and always told the complete truth on the sequence of events and the transactions on this issue.
It is the member for Thompson who continues to be blinded by this issue, as we have seen on many occasions in this House, and continues to try to find any aspect of anything to do with the privatization of MTS because he has opposed that, and he continues to rant and rave in his own way, but there is definitely no matter of privilege whatsoever, Madam Speaker.
Mr. Kevin Lamoureux (Inkster): Madam Speaker, I, too, want to put a few words on the record with respect to what I think is a very important issue. It is an issue which has been brought up in the past. I can recall one of my colleagues had discussed the issue of conflict of interest with me, in fact had sought out legal counsel to make sure, in terms of what it is that he should be doing, because someone that was very close to him was an employee at MTS, and it was that person or the employee who was subject to receiving some monetary benefit. He had decided after consulting and talking about the issue to avoid the vote itself because of the whole issue of perception.
I think this is where the government is losing it somewhat on this issue. You have to acknowledge that perception is important in politics, and what Manitobans see here is in fact a brother of a minister who is receiving significant dividends as a result of a government action. Under normal circumstances, if it were not the Minister of Finance (Mr. Stefanson) who was conducting or playing the role that he is playing or has played in the divestiture of MTS, I do not think it would be as questionable in terms of the whole issue of perception.
So what I see before us is two issues: The first issue dealing with a brother of the minister who was responsible for divesting, enriching or being enriched as a result of the divestiture, and the other issue of the conflict of interest of how these monies or the actual price that MTS was being sold for and people, outside of the minister's brother, also being enriched.
The issue that concerns me is the one of the perception, because I do not believe this is something in which the government can in fact win. I think that it is very awkward. I would find it very awkward to stand up and defend something, when in fact I am so closely tied to it because it is my brother who is in fact the receiver of a substantial amount of what is, in one way or another, indirectly, tax dollar benefits. I want to be very careful because I realize whatever I say inside the Chamber I can get away with saying and not be liable to lawsuits outside of this Chamber. So I recognize that it is very, very important in terms that we choose our words carefully.
Madam Speaker, I think that there is concern with respect to how this individual was in fact appointed. If in fact it was the Minister of Finance, I think that there is some merit to it being looked at. So what I would suggest is that, at the very least, this motion be taken as notice so that all parties concerned have some time to review it and to make a good decision as to what best to do with respect to it. Thank you.
Mr. Tim Sale (Crescentwood): Madam Speaker, the point of the motion of privilege is the misleading of this House, the knowing misleading of this House by the Premier (Mr. Filmon) and the minister responsible for Manitoba Telecom Services. I want to review the chronology, because it is important that we, first of all, make the prima facie case, and it is important that you understand that we raised it at the first possible opportunity.
We needed to review Hansard--and I want to deal first with the opportunity question--very carefully and to review the evidence from the annual meetings and the circulars that were shared with shareholders of the Manitoba Telecom Services prior to being able to move a motion of privilege. We did not receive the minister responsible for Telecom Services' answers until this morning in the rough draft of Question Period. So this is I think clear evidence that we have satisfied the first condition. This is a very important matter, and we did not want to pre-empt having read Hansard carefully prior to raising the matter.
Secondly, on a prima facie case. The Premier on four different occasions earlier this week refused to acknowledge that he had in fact, as the president of the Executive Council, signed an Executive Council order, an Order-in-Council, appointing Mr. Stefanson and Mr. Schellenberg as continuing members of the board of directors of Manitoba Telecom Services on January 7, 1997--that is more than a year ago--and further that that same O/C appointed nine other new members of the board.
In other words, the first and most central issue here is the appointment of the first board of directors of this company long before there was a shareholders' meeting to ratify new directors of the corporation.
The point my honourable colleague the member for Thompson (Mr. Ashton) has made is also important, that these are exactly, identically the same people whom the shareholders approved and continue to approve; that is, they are the people appointed by this government. They include relatives of senior members of this government. The person appointed from the previous board, Mr. Schellenberg, turns out to be the person in charge of the compensation committee of the new board.
So the first point of the prima facie case is that on January 7, 1997, this Premier (Mr. Filmon), this minister responsible, signed an Order-in-Council appointing 11 members of the board, one of whom was the brother of the minister signing the order, a second of whom was the person who turned out to be the chair of the compensation committee, Mr. Schellenberg, continuing from the previous board.
Now let me now turn to the second part of the prima facie case here, Madam Speaker. What we are attempting to show, and I think we have shown, is that people appointed by this government directly, by the Premier and the Finance minister, developed, approved and put forward a plan to compensate themselves and their senior executives, that that plan was developed well before there was ever an annual meeting of the shareholders, and let me show that so that we are clear on those dates.
This information circular to which the Finance minister refers was dated April 14, 1997. The annual meeting did not take place until May 30, 1997. So six weeks prior to the annual meeting, an information circular was sent to all shareholders, including the Minister of Finance, who of course has a special share which the minister responsible for the Telephone System previously, perhaps aptly called the golden share.
Madam Speaker, let us work the chronology backwards. In this information circular on pages 10 and 11, there is an item called special business of the meeting. Special business of the meeting is the stock option plan and the approval of that plan. There are quite a lot of details, approximately a page and a quarter in length. It is a fairly detailed statement of what the plan contains, but it is very important that the second-last paragraph be understood, that this plan has been conditionally approved by the Toronto Stock Exchange, the Montreal Exchange and the Winnipeg Stock Exchange. Now, those exchanges do not as a matter of routine simply rubber-stamp a fax and send it back. I do not think it takes too much imagination to recognize that the board of directors must have approved this plan in March of 1997 in order for it to be forwarded to the three exchanges with the approval of the board.
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Now let me remind you that in March of 1997, in February of 1997, in January of 1997, the only members of the board of directors of Manitoba Telecom Services were those members named in the O/C of January 7, 1997, that is, the 11 members appointed by the Premier and by the Finance minister.
Now, Madam Speaker, let us further run that chronology backwards slightly. If it were to go to the three stock exchanges subsequent to the approval by the board of directors, it would have had to go to those exchanges at least by March, which means that the compensation committee must have been doing their work in February, bare weeks after they were appointed by the Finance minister, the minister responsible for the system and the Premier (Mr. Filmon).
So within a very short period of time, a matter of weeks, the compensation committee was hard at work beavering away at developing a stock option plan that would enrich the chairman to the tune, at current values of the stock, by one million dollars. They did all of that work, every last stick of that work, prior to the meeting of the shareholders. It had been approved by the board of directors of the corporation prior to the meeting of the shareholders. It had been approved conditionally--because of the way the law is written--by three stock exchanges prior to the meeting of the shareholders. The shareholders did not change one dot, one iota of what had been put forward by the compensation committee.
So I believe that it is clear that there is a prima facie case that this government has misled the House, particularly the First Minister and the minister responsible, by indicating that they did not appoint a board, which in fact their own O/C shows they did appoint, and secondly, that all of the work on the stock option plan was completed before there was ever a meeting of the shareholders. All of those details were in place. I believe we have made our case.
Hon. Gary Filmon (Premier): Madam Speaker, I think it is important that you ensure that, in ruling on this motion of privilege, you ensure all relevant information is available to you on the matter. I want to emphasize a number of things that perhaps have been overlooked deliberately or otherwise in the prima facie case, and I understand the politics of why it is being done in this manner, but a great deal has been made of the fact that the chair of Manitoba Telecom Services is the brother of the current Minister of Finance (Mr. Stefanson).
What is important to note is that he has been the chair of Manitoba Telephone System since 1989, prior to the election to office in this Legislature of the current Minister of Finance. So, in fact, he was appointed much earlier and has had a significant history as chair of the board. Over the period of time since 1989, his continuance as chair has been reconfirmed periodically at various intervals along the way, but he arrived at that position, as I say, prior even to the election of the current Minister of Finance to this Legislature. So members opposite can make whatever case they want to, but this individual was appointed based on his competence and his capability, judged by obviously a government of the day prior to the arrival of the Minister of Finance to this Chamber.
Madam Speaker, another issue that I think is being overlooked. The members opposite clearly have this information, because it was contained in the news release that was issued on December 2, 1996, and it is entitled "Findlay Announces Proposed MTS Board of Directors" and that board of directors that is being quoted from the Order-in-Council was in fact developed and initially announced to be appointed by the then minister responsible for the Manitoba telephone services. What intervened between the announcement of the names and the production and signing of the Order-in-Council, of course, was the privatization of the former Manitoba telephone services into Manitoba Telecom Services, in which case then responsibility transferred over to the Minister of Finance as the pro tem holder of the golden share on behalf of government. So in fact the announcement and decision, which members were well aware of, of who the board of directors were, was made much earlier by the minister then responsible. Again, they do not make a fuss over that. They are attempting, I know, to make the political credit and take the political shots, and so that is conveniently set aside.
Once in private ownership, the Manitoba Telecom Services no longer obviously was in the control of this Legislature in any way. Our responsibility, as has been laid out on numerous occasions, was to ensure, through the golden share provision, that the public interest in the public investment as holders of bonds was being looked after, and that continues to fall under the realm and responsibility of this Minister of Finance. But, I repeat, that company is no longer and was no longer in control of this Legislature or this minister or this cabinet.
So the plan to provide the shares as compensation was then developed for presentation to the annual meeting. Why, Madam Speaker? Because, in fact, it could not be implemented by the board of directors, because (a) No. 1, they had not been confirmed by the shareholders as the board of directors, and so they did not have power to act, and (b) they did not have power then to approve this without the vote of the shareholders.
So all of these things that were prepared in the interim by staff and by others and developed by the board of directors could have absolutely no relevance if the shareholders decided to do different things, and in fact the shareholders had the power to vote a different board of directors. That has been done, will be done in future by boards of private companies where they will take the recommendations of whatever is the nominating committee, and they will set it aside and put in place in fact different choices. We all have read about that being done. We have all read about different directors being put in place. In private corporations, we have all heard about shareholder revolts or shareholders' democracy taking over corporations and new directors put in place.
So in fact two things could have happened at the annual meeting: one, a different board of directors could have been in place; and two, the shareholders could have turned down the proposal that was put before them for consideration for compensation of both senior staff and directors and including the share option. None of that did happen because in fact the vote of the shareholders did both confirm the directors and the compensation package.
All of those things, though, did happen only after the new board was put in place, and in fact then it devolved to our area of authority which was that we had the authority to appoint only four of the 11 directors, which did not include Mr. Thomas Stefanson, the chairman. They were separately and independently elected by the shareholders of the new privatized Manitoba Telecom Services.
So you will find, Madam Speaker, that in nothing that was said by either myself or the Minister of Finance (Mr. Stefanson) did we mislead or place false information on the record, that this is all a pipe dream of the member for Thompson (Mr. Ashton) and his colleagues who have, obviously, a very serious fixation about this particular issue with Manitoba Telecom Services, an issue which they will never ever let die, and that is their right. That is their right, because for them it is all politics. That is all they live for; that is all they work for. They do not work for the best interests of the people of Manitoba. They only work for their own political interest.
Mr. Gary Doer (Leader of the Opposition): Briefly to the point of privilege raised, Madam Speaker. Over the last two days on April 6 and 7, the Premier (Mr. Filmon) on four occasions and the Minister of Finance (Mr. Stefanson), the minister responsible for the golden share, repeatedly stated in this House and in Hansard that the only appointees to the board of directors were the four so mentioned. They failed to mention that on January 7, 1997--
An Honourable Member: The current board of directors. That is all we are talking about.
Mr. Doer: You know, I did not interrupt the Premier. Perhaps the Speaker could hold the Premier accountable in this Chamber.
Madam Speaker: Order, please. As I indicated earlier, this is a very serious matter, and I would request the co-operation of members on both sides of the House in listening to the member presenting the reason for a prima facie case being established.
Mr. Doer: As I stated, the Order-in-Council signed on January 7, 1997, appointed Thomas Stefanson to chair the board of directors. That was signed by the Premier (Mr. Filmon). It was further signed by the minister responsible for the golden share. That is what we asked on Monday and Tuesday in terms of the individual in question, in terms of the $1-million stock option bonus. That is the question that the Premier and the Minister of Finance (Mr. Stefanson) in our view misled the House and misled the public and contradicted an Order-in-Council that was signed by them, and it is clearly on the public record, which is the essence, the absolute essence, of the point of privilege today in this Chamber.
Now, Madam Speaker, the Premier goes on to talk about Mr. Stefanson was appointed in 1989. We have not disputed that. If Mr. Stefanson had been appointed in 1989 and had received a million dollars in stock option bonuses with the old minister of Telecom Services or some other minister, it would have been a matter of Tory greed. It would have been, pure and simple, a matter of Tory greed, a political issue of the Tories selling a public asset and that public asset in turn being turned over for the private gain of a well-known Tory, and that would have been just simply Tory greed, but it goes beyond Tory greed. It goes beyond Tory greed, because you have a situation today where the person who appoints the person who ends up getting a million dollars is in fact the brother of the same person. You have the person who is given the responsibility of maintaining the golden share--I refer back to two weeks ago Thursday when the former minister of telecommunications went on repeatedly in the Interim Supply and said over and over and over again the Minister of Finance holds the golden share.
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So here you have an individual that is responsible for the public interest. He is responsible for the public interest of the Manitoba Telecom Services. He has been appointed by his Premier, and I would say put in a horrible situation, compounded by the fact that he did not realize he was in an unethical situation--he has been appointed to deal with our share and the debt that is owing to the taxpayers. So he is responsible for ensuring that the maximum amount of money that is owed to the public of Manitoba through the share offering be returned to the debt repayment as the holder of the golden share. He is not responsible as the holder of the golden share for allowing obscene bonuses to be given to well-known Tories when it is against the public interest of claim centres, rate increases and debt repayment.
So if we were to look at Mr. Stefanson in his former capacity, it is Tory greed. If we look at him now in the relationship to the minister responsible for the Telecom Services holding the golden share, being the brother of the same person who is making the million dollars, regrettably that is Tory ethics. The point of privilege today is focused in on not dealing with the relationship of the golden shareholder and the chair of the board and the Order-in-Council on January 7, on April 6 and 7 and 8 of this year. Madam Speaker, we think it is obscene that people are making millions of dollars, and we say that that is Tory greed, but we say the ethics of this issue go way beyond that. The Premier does not see it. The Minister of Finance regrettably does not see it, but we on this side see it, and that is why the point of privilege today.
Madam Speaker: A matter of privilege is a serious concern. I will take this matter under advisement to consult the authorities and will return to the House with a ruling.