The Whalley Trial Part IV: Responsibilities

Editor’s Note: John Whalley, the former Economic Development Manager of the Cape Breton Regional Municipality (CBRM) is suing the CBRM for constructive dismissal. The case finally came to trial last week and the Spectator was there. We’re presenting our coverage in a series of articles because the trial touched on so many issues of interest to CBRM residents. This is Part IV. (Read Part I, Part II and Part III)

When last we tuned in to former CBRM Economic Development Manager John Whalley’s testimony, he was talking about the issue of port governance, which became a thing around 2014 when it was decided the old Sydney Ports Corporation (SPC) would be replaced by a new entity. Whalley was asked — by Jim Gogan of The Breton Law Group who had been tapped by the CBRM to structure the new organization —  for his input.

Whalley testified that he had strong ideas about the new port entity, chiefly, that it should be accountable to the CBRM council in a way the SPC, which operated the Joan Harriss Cruise Pavilion and the Sydney Marine Terminal for the municipality, was not. Whalley characterized the SPC as too “independent.”

(I ran across a startling example of this independence in the minutes from this 22 April 2014 Special Council Meeting, during which council was informed, through a lawyer’s letter, that it had no control over the SPC’s decision to hire non-union workers at the Sydney Marine Terminal. The CBRM, the lawyer said, was merely the SPC’s “landlord” with “no say over the  operational decisions of its tenant.”)

Whalley’s chief reason for wanting the new port entity to be under council control, however, was that between the $6 million Greenfield Site purchase and the $38 million harbor dredge, the CBRM had dumped millions into the harbor (my words, not his) and needed to protect its investment. Moreover, he believed that should the container terminal dream come true, any “concession” agreement signed with a terminal operator would be worth “millions” of dollars to the municipality and he wanted the amount the CBRM was to be paid established in advance.

Whalley said he shared all his thoughts on governance, as requested, with Gogan but received no response and, in the end, none  of his recommendations was incorporated into the new corporation’s final Articles of Association. What the CBRM ultimately got, said Whalley, was a “private” organization that would not meet in public — an organization that was owned by the CBRM but not accountable to it.

An organization called “New Port Corp” by the lawyers but which you and I know as the Port of Sydney Development Corporation.


Merritt hire

Another noteworthy event I forgot to mention in my recap of the year 2014 — a year chock-full of notable events — was the July 2014 hiring of one Michael Merritt as CBRM CAO.

CBRM CAO Michael Merritt

Michael Merritt

As you will recall, after former CAO Jerry Ryan was “let go” (in the words of the CBRM’s lawyer, Tony Mozvik) — first transitioning into a consultant, then retiring in September 2013 — CBRM Finance Director Marie Walsh was tapped to serve as “interim” CAO.

Council, in its infinite wisdom, decided to do a nation-wide search for a replacement CAO and apparently in this whole, wide country, the best candidate the headhunters could find — after eight months of searching and out of 60 applicants — was Michael Merritt, a former provincial bureaucrat in Ontario and New Brunswick and Alberta with no experience in municipal politics.

What I hadn’t realized (or had forgotten) was that to look outside the CBRM for a CAO, council had to do an end-run around its own hiring policies, which gave preference to internal candidates. It gave itself permission to do that at its 18 November 2013 meeting, during which it passed motions to extend Walsh’s “interim” contract until a new CAO was found, to “deviate” from CBRM hiring policies in the hiring of a CAO (District 10 Councilor Darren Bruckschwaiger’s was the only dissenting vote), and to establish two committees, both to be chaired by Deputy Mayor Kevin Saccary:

One Committee will act as an oversight body for the RFP process to select an independent recruitment agency; also this Committee will continue its work and liaise with the consultant to identify suitable candidate(s) as set out in the issue paper from the HR Director.

The second working Committee will review and revise (if necessary) the current job description of the CBRM CAO for acceptance by Council and presentation to the other working Committee.

I have tried (unsuccessfully) to discover which councilors were on these committees.  I know District 6 Councilor Ray Paruch was on one of them, as was District 5 Councilor Eldon MacDonald, but I cannot find a complete list anywhere (neither, for the record, can the municipal clerk of the CBRM). I would really like to know how many of the councilors on these committees ended up (as Saccary did) on the secretive interim port board.

(A thought occurs to me on re-reading this not-so-ancient history: why did the search for a new CAO begin only in November 2013? Why would council not have begun its search as soon as it had appointed an “interim” CAO with a fixed term? What is it about the word “interim” that politicians in this burg don’t seem to understand?)

In January 2014, the CBRM engaged a headhunter to carry out the search for a new CAO.

Somewhere around May 2014, the headhunter called interim CAO Marie Walsh to tell her she wasn’t getting the job. As she told the Cape Breton Post:

“I got a call from the consultants. They were looking for characteristics I guess I didn’t have.”

Marie Walsh

Marie Walsh

Knowing the successful candidate was Michael Merritt and having watched him closely during his time in the position, I am hard put to decide which of his “characteristics” made him a better candidate than Walsh — his predilection for tan suits? His habit of tacking the phrase “and such” onto most of his pronouncements? (A habit, I was delighted to note, that his time away from us has done nothing to change. He spoke during his testimony of his approach to positions of “management, leadership and such,” mentioned at one point having reached out to “lawyers and such” and explained how he had communicated certain information to Walsh via “email and such.”)

Whatever it was, it wowed the CBRM hiring committee which returned  to council in something like triumph in July 2014 to announce their labors had borne fruit: they were recommending council hire Merritt.

Bruckschwaiger took the opportunity to reiterate his support for Walsh and to wonder about the selection process, which he’d been barred from on the grounds his support for Walsh constituted a conflict of interest.

Mayor Cecil Clarke joined the discussion from the chair, in that little way he has, to defend the selection process and insist that he himself had not been involved in it. It’s kind of a funny discussion to watch, with the benefit of hindsight. And by “funny,” I mean “painful.”

A final note on the Merritt hire: Whalley in his testimony and Jerry Ryan in his both noted that Ryan actively discouraged his staff from claiming expenses for things like travel. Ryan said he preferred an employee’s full compensation take the form of salary.

Our new CAO had no such compunction. Here’s my best guess at how much he cost us:

Merritt’s remuneration

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Merritt, who was born in Cape Breton but who, Whalley testified, hadn’t lived in Nova Scotia for decades and was unfamiliar with the economic situation in the CBRM, started his job in October of 2014 and one of his first acts was to ask Whalley for an “orientation” on economic development.

The email Whalley sent Merritt in response contains the description of his responsibilities that Whalley’s lawyer would argue was more accurate than the description of the economic manager’s duties contained in the letter of hire he’d signed 17 years earlier.

Port of Sydney sign

Whalley testified that he’d discussed port development at some length in his email to Merritt, telling the court he saw it as “so fundamental” it had to be part of the CBRM’s economic development strategy. He went further, arguing the municipality should have a dedicated department overseeing all aspects of economic development, including not just the port but small business development, which Whalley characterized as “Eileen’s department” (a reference to Eileen Lannon Oldford of Business Cape Breton) and tourism (where he didn’t name names but was clearly referring to Destination Cape Breton led by Mary Tulle). He characterized both as “private organizations spending public money.”

Whalley also linked port development to broader issues, like the fight to preserve the local rail line; Sydney waterfront development; and the potential relocation of the Marconi Campus of the Nova Scotia Community College (NSCC) to that waterfront, a move that, in 2014, according to Whalley, was the subject of early discussions between the CBRM and the province.

This last reference is important because when Whalley was told by Merritt in 2015 that he would no longer have any responsibility for port development, he was offered what he saw as the consolation prize of responsibility for the Marconi Campus move.

Mozvik, the CBRM’s lawyer, would argue the 2014 email showed the Marconi move had always been one of Whalley’s key responsibilities but Whalley testified that the municipality had a very limited role to play in the move, which was entirely up to the provincial government, and that overseeing the file would not be a legitimate full-time job for a municipal economic development manager.



At this point in his testimony, Whalley also spoke about another issue that has been causing the Spectator to, as a friend from Canso would say, cut its ol’ eyes at the municipality for some time now. (It means cast a deeply suspicious sideways glance upon, if I have understood it correctly, and I hope I have because I’ve been using it that way for about 30 years now): the Regional Enterprise Networks or RENs.

In 2013, the federal government announced it would no longer fund Atlantic Canadian organizations like CBCEDA and would instead provide economic development funding on a project-by-project basis.

Nova Scotia’s NDP government agreed to make up for this lost funding, but proposed a new delivery model for it — the REN system. The CBRM was to join REN 6, which would include the Counties of Victoria, Richmond and Inverness (but not the Town of Port Hawkesbury which ultimately joined a mainland REN).

In the meantime, the CBRM, under Mayor Cecil Clarke, made sure CBCEDA — which had morphed into the Cape Breton Small Business Development Association but remained under the leadership of Lannon Oldford — continued to receive funding from the municipality. As Lannon Oldford told the Cape Breton Post in April 2013:

“The CBRM had approved $250,000 to the regional enterprise network budget effective April 1 and they advanced $150,000 of that so that we would continue doing the preparing work for the (regional enterprise network), but in the process of that it’s going to take us probably about two months to wrap up CBCEDA because of auditing and closing out claims and things of that nature,” she said.

To be clear: the REN did not exist at this point but the Cape Breton Small Business Development Association was nevertheless entrusted with more than half of the CBRM’s contribution to its budget.

In June 2013, the CBRM is announcing on its website that “three municipalities” (the CBRM, Richmond County and Victoria County) are ready to form a REN. In January 2014, the CBRM is announcing on its website that “four municipalities” (Inverness has joined the gang) are ready to form a REN. But according to this Cape Breton Post story, the REN board wasn’t put in place until November 2015.

That same story quotes REN 6 board chair Brad MacDonald as saying that as of 4 February 2016, the board was planning to “meet next week to look at its budget for the upcoming fiscal year and to take steps to create a detailed business plan.”

Then on 8 June 2016, Mayor Cecil Clarke informed CBRM council that the CBRM had withdrawn from the REN.

The Spectator was told by Victoria County Warden Bruce Morrison, the chair of the REN 6 Liaison and Oversight Committee, that Clarke had pulled the CBRM from the organization during a 26 May 2016 meeting of that committee. (Did I mention Clarke has a way of doing things first and getting council permission after?)

At that 8 June 2016 meeting, Clarke asked council to make what had then become Business Cape Breton the CBRM’s economic development entity. He also told council the CBRM would ask the province to treat it like a REN in and of itself and give it its share of economic development funding.

The province refused.

This stuff is all very murky to me but what is clear is that CBCEDA was de-funded in the spring of 2013 and the Cape Breton REN didn’t really seem to be up and operating when Clarke withdrew the CBRM in the spring of 2016.

So BCB seems to have been relying on some federal funding (for its small business development program, funding it eventually lost) but mostly it seemed to be relying on the CBRM. And, in fact, Whalley testified that in the spring of 2015 he was called into a meeting with Clarke and District 11 Councilor Lowell Cormier the subject of which was finding funding for BCB.

It led to one of the oddest developments in the story, which was Whalley offering to give up his $150,000 budget to BCB. Merritt would testify that the budget included Whalley’s salary, and Mozvik would argue the offer was essentially an offer to quit.

But Whalley testified that it was clear the mayor and council wanted to retain BCB as the economic development agency for the municipality and he knew they wouldn’t “be able to count on the province for funding.”

He said he was also seeing a “far diminished role for himself” in port development as economic development manager and had actually had a “fairly explicit” conversation with Merritt in late February or early March 2015 in which he said he hoped to work for the new port organization. (Merritt, under questioning from Whalley’s lawyer about this request would deny Whalley had ever made it, stating: “He did not.”)

Obviously, for Whalley’s case, whether he had previously threatened to resign or not matters, but my interest is more in this question of funding for BCB. I can now point to three occasions (the two documented here and one that arose just before BCB finally breathed its last in 2018) upon which the CBRM went to great lengths to keep the organization afloat even as the province and the federal government refused to fund it.

The question, obviously, is why? Especially given that most of the money that went into BCB was spent on salaries, the size of which no one knows because, as Whalley said, this was a “private organization spending public money.” Could it really all come down to the mayor’s loyalty to Lannon Oldford, who had hired him for a year when he was between political gigs? If so, that loyalty seems to have cost the CBRM hundreds of thousands of economic development dollars.

But that’s enough for now. This session of the Whalley Trial Recap is now adjourned.

Next up: a “quite significant” property deal.