Fast & Curious: Short Takes on Random Things

Mary Makes a Meme

How it started:

 

Photo of old Cape Breton Post building, Sydney, NS

 

How it’s going:

 

Photo of Ajay Balyan in front of old CB Post building in Sydney, NS

On the bright side, having let it it sit empty for two years (and catch fire once), the entrepreneurs who bought the building for $225,000 are hoping to sell it for $399,000.

 

Mary Makes Another Meme

How it started:

 

Development proposed for Dodd Street, Sydney, NS

 

How it’s going:

Development proposed for Dodd Street, Sydney, NS

 

Rap Sheet

Writing about the allegations against Bridging Finance Inc this week got me to thinking about other ethical issues bobbing in the wake of our container terminal scheme.

In case you missed it, Bridging, which has partnered with Membertou and Sydney Harbour Investment Partners (SHIP) in the Novaporte container terminal project, has been in receivership since April 30, pending the results of an Ontario Securities Commission (OSC) investigation into allegations of misappropriation of funds.

Bridging’s founders — David and Natasha Sharpe, the erstwhile CEO and chief investment officer of the company — have been fired by the receiver, PricewaterhouseCoopers, and what this will mean for projects like Novaporte, let alone for Bridging’s investors, remains to be seen. (I hope to have something more to say in next Wednesday’s edition.)

Natasha and David Sharpe

Natasha and David Sharpe, 11 April 2019 (Source: Bridging Finance Inc https://www.bridgingfinance.ca/a-first-for-canada-an-indigenous-focused-fund-that-projects-8-per-cent-returns/mgmikelndrd5rd6xz365anxohi/)

Interestingly, if the Sharpes are eventually found guilty of the charges against them, it will be just the latest — and most serious — legal or regulatory or ethical issue associated with our container port project.

You may recall that Albert Barbusci, principal of SHIP, was fined $60,000 by the Autorité des marchés financiers (the AMF), Québec’s financial sector regulator, in 2014. The press release announcing the charges explained:

Albert Barbusci is facing five charges and a $52,000 fine for aiding Cadence Holdings inc., of which he is the majority shareholder and president, with illegal distributions of shares of Biotonix inc., carrying on business as a securities dealer without being registered with the AMF and soliciting investors. The AMF is filing two charges and also seeking a $40,000 fine against Cadence Holdings inc. for the illegal distribution of shares of Biotonix inc.

In the end:

…Barbusci pleaded guilty to one charge of a distribution without a prospectus. A conditional stay of proceedings was issued with respect to the four other charges against him. Judge Silvie Kovacevich ratified the joint sentencing recommendation of the parties, namely, an amount of $20,000, which is four times the minimum penalty set by law.

Cadence Holdings inc., of which Albert Barbusci is the president, secretary, sole director and majority shareholder, pleaded guilty to two charges of making distributions without a prospectus. Judge Kovacevich ratified the joint sentencing recommendation of the parties, namely, a total of $40,000, which is four times the minimum penalty set by law for each charge.

Asked about the fine by the Cape Breton Post in 2015, Barbusci’s partner, Barry Sheehy, brushed it off:

In an interview Monday, Sheehy said he believed the issue with the securities commission was “administrative,” and Barbusci had disclosed it to municipal officials.

Port of Sydney CEO Marlene Usher was equally unconcerned:

“There were good explanations and we didn’t feel that in any way that jeopardized our project, we didn’t feel that it impacted our relationship in terms of the development,” she said. “We knew that that would become a matter of public record — with the Internet today, there’s no hiding anywhere.”

(On the other hand, a Montreal-based reporter I spoke with earlier this year literally laughed out loud at the notion that a fine by the AMF was merely an “administrative” matter.)

Then there’s the case of the China Communications Construction Company (CCCC), Barbusci’s first choice to design and build and take an equity stake in the container terminal project.

China Communications Constructions Logo

Soon after CCCC’s involvement was announced, the googlers got to work and discovered the firm had been barred for eight years from participating in any road and bridge projects financed by the World Bank Group for “fraudulent practices under Phase 1 of the Philippines National Roads Improvement and Management Project.”

(Just to be clear, China has no monopoly on corruption in international construction — four years after CCCC was barred, Canada’s SNC-Lavalin got a 10-year ban for “misconduct in relation to the Padma Multipurpose Bridge Project in Bangladesh, as well as misconduct under another Bank-financed project.”)

In 2018, the federal government barred CCCC from taking over a Canadian construction company citing “national security” (although it didn’t elaborate on this rather vague concern).

Neither development bothered the Port of Sydney CEO, according to the CBC:

Usher said she doesn’t have any specific concerns about the Chinese company, and said further due diligence will be conducted before any final deal is struck.

“I do know that this company has a good reputation in construction,” she said. “They’ve partnered on other projects internationally in Australia. They have a very solid relationship with us.”

(That “very solid relationship” has since dissolved.)

It will be fascinating to see whether allegations of outright fraud — which Bridging is facing — will make an impression where a breach of securities law and a World Bank ban have failed to make the slightest dent.

 

Housing rights

Joy reigned in some Halifax circles yesterday as the federal government announced it would “provide a $115.5 million, low-cost loan to a Halifax-based developer to include what were described as 76 affordable rental units in a building it plans to construct.”

You’ll note that Vernon Ramesar, reporting the story for the CBC, didn’t say the project would include “76 affordable rental units,” opting for the much more qualified “would include what were described as” [emphasis mine] 76 affordable rental units.

scale with "human rights" on one side and "economic driver" on the other

Inadvertently accurate graphic from the Nova Scotia Affordable Housing Commission report, “Charting a new course to affordable housing in Nova Scotia.”

As it turns out, the developer — BANC Investments whose president, Alex Halef, is a member of the Nova Scotia Affordable Housing Commission — has a different idea of “affordable housing” than do local housing advocates.

The project, to be called “The Interchange” (because naming a building after a highway junction won’t cause any confusion) is “a 12-storey, 324-unit multi-use building…to be built at 3514 Joseph Howe Drive in Halifax.”

It received funding through the Canada Mortgage and Housing Corporation’s Rental Construction Financing initiative (RCFi).

“Affordable,” according to the CMHC press release, means:

…rents at or below 30% of the median household income in the area, including 65 units with rents at or below 70% of 30 % of the median household income threshold. Affordability will be maintained for a minimum of 21 years.

The CBC reports that, according to the office of Ahmed Hussen, the federal minister of families, children and social development, “initial” rents for the project will range from $1,455 to $1,844, depending on unit type.

But the Canadian Centre for Policy Alternatives — Nova Scotia (CCPA-NS) took to twitter to remind people in general — and, I would guess, the CMHC in particular — of the CMHC’s actual definition of “affordable” housing:

And Alec Stratford, executive director and registrar of Nova Scotia Social Workers and chair of the CCPA-NS steering committee, called the federal government’s decision to give a $1.15 million low-cost loan to “a wealthy developer to build 76 affordable housing units for 20 years” a “striking failure of fiscal and social policy.”

He also took to Twitter to explain how that money might have been better spent:

[I]f the federal government were to provide that same loan to either a not-for-profit housing provider or even Housing Nova Scotia they could purchase 63 units that are on the market today for $23 million and rent them at an affordable rate

Had the loan been extended to a not-for-profit community project, says Stratford, they could build an estimated 715 new units, based on an estimated cost of $160,797 per unit found in the CCPA-NS housing report, “Keys to a Housing Secure Future for All Nova Scotians.

But neither of these options would benefit a private sector developer (although they would generate the same economic benefit in terms of construction jobs) and it seems to be a truth almost universally accepted in our society that to be considered a success, a project must benefit a private sector developer. In fact, according to Don Pittis, senior producer at CBC’s business unit, “earning a profit is at the indispensable heart of creating housing in Canada.”

Pittis — in a piece labeled “analysis” — was responding to a Globe and Mail op-ed critical of a Toronto developer’s plan to buy up and rent out $1 billion worth of single-family dwellings in Ontario. Pittis came to the defense of the beleaguered developer, Faran Latafat of Toronto-based Core Develpment, who was “shocked” by the negative reaction to her plan:

While interested in making a profit, like any other business, when Latafat announced the company’s plans, she was convinced Core was effectively performing a public service, answering a need by creating more affordable rental homes in places where people wanted to live.

Nothing to see here, folks, just developers “effectively performing a public service,” earning a profit while serving as the “indispensable heart of creating housing in Canada.”

Thank goodness some people are beginning to question this type of “analysis.”