Dear Minister Sohi: We Want Our Berth Rights

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CBRM Mayor Cecil Clarke was beside himself when Sydney-Victoria MP Mark Eyking suggested the federal government’s one-third share of the funding for our second berth could hinge on the CBRM installing a permanent board of directors for the Port of Sydney Development Corporation (PSDC, until they come up with a cuter acronym).

His spokesperson Christina Lamey was even more beside herself, taking to Twitter to unload on Eyking.

Because heaven forfend the interim port board, in place since 1 April 2015, should be replaced a moment before it is absolutely necessary. Isn’t that why the Port Corporation’s Articles of Association include a big, fat “notwithstanding” clause? Isn’t that why the lawyer who wrote them was so very strict when determining the length of time the interim board could remain in place? Isn’t that why he stated, with crystalline clarity, that the interim or temporary board could sit only until such time as the permanent board was appointed and not a millisecond longer?

 

Mayor? What Mayor?

Clarke wrote to Canada’s Infrastructure and Communities Minister Amarjeet Sohi to complain about Eyking’s petty insistence on “governance.” Eyking, said Clarke, just doesn’t get it:

The Port of Sydney Development Corporation is led by an interim board of directors of elected councillors and chaired by the Municipality’s Chief Administrative Officer.

Isn’t there somebody else on that board? Not a councilor exactly, not the CAO but someone just as closely connected to the municipality? Wears a Run DMC-style medallion? Oh right — THE MAYOR.

sohi_b

Amarjeet Sohi, Minister of Infrastructure and Communities, pictured before he received Cecil Clarke’s letter. (Photo via Government of Canada)

In his efforts to shed light on the current structure of the PSDC board, Clarke failed to mention that he sits on it.

Did he just forget? It seems unlikely — I saw him at the head table at the Port of Sydney Development Corporation AGM just before Christmas and he seemed to know why he was there.

Did it occur to him that writing as both mayor of the municipality and a member of the PSDC’s board of directors might exacerbate the federal government’s concerns about governance rather than assuage them?

Does he think of himself simply as a “councilor?”

However it happened, Clarke bypassed any mention of his own involvement with the port board to focus instead on Eyking’s choice of the word “independent” to describe it:

The board he is referring to is not “independent.” The Port is owned by the Municipality and the board is appointed by the Municipality.

Let’s unpack that, shall we?

 

Independence: Not Just a City in Missouri

As explained in a helpful attachment to Clarke’s letter from the CBRM’s shadow city solicitor, Jim Gogan, the PSDC is a Nova Scotia limited by guarantee company:

As such, the Corporation has no share structure, but rather Members. The sole Member of the Corporation is the Cape Breton Regional Municipality (CBRM), as represented by its Council.

So far, so good.

Regular companies are owned by their shareholders and their boards of directors are elected (or appointed) by and answerable to their shareholders.

NS limited by guarantee companies are owned by their members, and their boards of directors are are elected (or appointed) by and answerable to their members.

The PSDC Articles of Association say the CBRM Council (representing the sole member of the PSDC) will appoint the board.

But that said, we still talk about directors of regular companies as being “independent,” even though they are elected/appointed by the shareholders. Consider the Canadian Imperial Bank of Commerce’s rules for directors:

A substantial majority of the Board shall be independent as set out in this policy. All members of the Audit Committee shall be independent in accordance with this policy and other criteria outlined in that committee’s mandate. All members of the Management Resources and Compensation Committee and Corporate Governance Committee shall be independent in accordance with this policy. A majority of the members of the Risk Management Committee shall be independent in accordance with this policy.

The CIBC then outlines, at some length, who is (and is not) considered to be “independent.” (Employees and their spouses, for instance, are not.)

Eyking is correct in demanding an “independent” board. He means a board not stacked with elected officials and municipal employees — he means the board described in the PSDC’s Articles of Association.

 

Secondment

Clarke then sought to reassure the Minister about the quality of governance at the PSDC by pointing to its CEO:

The organization is run by an ACOA executive, Marlene Usher, on secondment from the federal government.

I think Minister Sohi deserves more detail than that. I’d have written it this way:

For reasons that escape me now, I asked Marlene Usher of ACOA (formerly of ECBC) and Jim Gogan of the Breton Law Group to come up with a port governance plan (even though ECBC had actually already funded a $1 million port governance plan published in 2011). Marlene and Jim had some great ideas, like, the CEO should be paid $200,000 a year and the CEO should be Marlene Usher.

I talked to council about all of this (in camera, because it’s easier that way, don’t you find?) and they agreed. So before we even established the PSDC or appointed a board (which was supposed to appoint a CEO and set his/her salary) we chose a CEO! And we took all the money we saved by not having a job competition, or advertising the post, or interviewing people and used it to pay half of her $200,000 salary. Your government pays the other half.

Put that way, I find Usher’s appointment sounds less plausible as a guarantor of good governance.

 

Berthers

Finally, Clarke argued that it’s the municipality, not the PSDC, that is behind the second berth project, so if there were three ducks and a raccoon on the PSDC board, it wouldn’t matter: the feds should just give the second berth money to the municipality.

Port of Sydney N.S. update brochure

Artist’s rendition of second cruise berth.

I think we’ve established by now that the lines between the municipality and the PSDC have been blurred to the point of non-existence — the municipality pays half the CEO’s salary; the mayor, the CAO and three councilors sit on the PSDC board. (I could also mention here that the PSDC pays no rent to the CBRM for the facilities it manages.)

Moreover, the PSDC will surely be managing the second berth (as well as the Joan Harriss Cruise Pavilion and the Sydney Marine Terminal). If Clarke has another manager in mind, he hasn’t told the PSDC, which has pictured the non-existent second berth on the cover of its own updates (see right).

I don’t think it’s a reach to suggest that the board overseeing the corporation that will manage this new, government-funded facility, should be properly constituted.

 

April Fools?

I think Eyking’s intervention will at least ensure the new port board is in place by 1 April 2017 — two years from the day the interim board was appointed.

As mentioned earlier, I attended that PSDC AGM before Christmas and didn’t hear any solid confirmation from CBRM CAO Michael Merritt that the board would be in place by then, just a smiling assurance that vetting the candidates would be a lot of work and three months was a short time and gosh, they’d certainly hope to have the new board in place by April.

Considering this was the same man who explained, during that same meeting, that the interim board hadn’t met since February 2016 because of “the floods” and 2016 being “an election year,” I would suggest he was laying the groundwork for a further delay in the installation of the permanent board.

But that would be very hard to get away with, now that they’ve staked their reputation for governance on having the permanent board in place by April.

Of course, who they appoint to the board will be just as important as when they appoint them and it will be up to CBRM Council to ensure the candidates are qualified and engaged and — dare I say it? — independent. That said, our last Council approved the secondment of Marlene Usher, agreed to pay her $200,000, gave the thumbs up to Articles of Association that put no limit on the term of the interim board and allowed that board to be filled with elected officials and municipal employees. I had (and still have) higher hopes for our new council, but it just agreed to extend for five years a contract it hadn’t actually seen, so I’m not going to count my independent PSDC directors before they’re hatched (which kind of makes it sound like I want them to appoint ducks to the board. Maybe I do.)

It seems that roughly every 10 months I realize that our autocratic mayor is not the problem: it’s those members of council who acquiesce to his every demand that are the problem. And that’s a governance issue in itself.

 

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