Desperate for revenues, the Ontario Liberals were full steam ahead on the sale of Hydro One in mid-July. Then they hit the iceberg.
Maybe it was the iceberg, in the formidable form of Joe Groia, that had hit them. Regardless, Groia shouldn’t need much of an introduction. He’s a bencher of the Law Society of Upper Canada and a widely recognized securities lawyer who’s both passionate and tenacious.
In this case, the Canadian Union of Public Employees, one of the stakeholders opposed to the sale, has retained Groia & Co. PC. Groia’s first action was to simply write to the Ontario Securities Commission to note that the government’s move to block the Hydro One board from oversight amounted to interference with its mandatory duties and responsibilities.
“The Liberal government has sidelined the Hydro One board of directors in advance of the proposed sell-off of this public asset,” his clients suggested in their announcement. “In an [initial public offering], the board of directors is normally responsible for protecting the interests of all stakeholders in the corporation — and in this case, those stakeholders include the people of Ontario, the workers of Hydro One, and the investors in Hydro One.”
A few days later, the government capitulated and reinstated the board of directors, promising the OSC that it would fully comply with its obligations in ensuring fair treatment of all parties in the impending sale.
At the same time, the minister of energy announced a new board was in place at Hydro One, chaired by David Denison, former president and chief executive officer of the Canada Pension Plan Investment Board.
Groia and his colleagues are justifiably happy with the results of the first skirmish. Now, it’s a waiting game to see when the other shoe will drop. “It was an unprecedented notion. They are selling shares but they take away the power of the board to oversee the sale,” he says.
The core issue, he says, is the rules say the board isn’t responsible just to the government or key shareholders but to the company as a whole. That includes all stakeholders from employees to customers to other shareholders.
“It really upset the balance because a board of directors has to act broadly in the best interest of the company,” he says. “The question I can’t get answered is why did they do that? We’ve yet to get an answer.”
With the battle lines drawn, the next move is in the government’s court, he says, with all eyes on the new board of directors to see how it will proceed. The board, he says, must address a much wider set of issues beyond the government desire to sell off 60 per cent of Hydro One, presumably to the highest bidder.
With the removal of agencies such as Hydro One from public scrutiny through regulatory changes introduced in the Budget Act, the question of transparency becomes even more critical.
“My focus is on the public market and public companies have an obligation to act in the public interest, and you would expect a government to be sensitive to those kinds of issues not only doing what was the minimum but to be at the high end of that,” says Groia.
The next step, he suspects, will be to issue a preliminary prospectus. “It has to be public. If it isn’t, it will be the end of civilization as we know it,” he says.
“The announcement of a sale is not the end of the process. It is the beginning of the process, so I would think the board would consult all the stakeholders broadly about various elements of the company. But when they go to the next stage, they will know there are a group of people watching closely.”
Of course, the government doesn’t really want a transparent process. Premier Kathleen Wynne has made no secret of her disdain for Prime Minister Stephen Harper, but she’s acting more and more like him every day in some ways.
We’re still no closer to understanding how a carbon tax will work or how the Ontario pension plan will operate. Indeed, we have no assurances the pension fund won’t simply be a revenue tool to fund capital spending as another way to borrow money but this time from its own taxpayers.
They want us to trust them, but that’s the problem. For trust, there has to be transparency.
Ian Harvey has been a journalist for more than 35 years writing about a diverse range of issues including legal and political affairs. His e-mail address is email@example.com.