Natural Resources Committee on Nov. 20th, 2013

[The Chair, Conservative, Leon Benoit]

Mr. Balsillie, go ahead.

[James Balsillie]

Thank you very much, and thank you for that question, Ms. Crockatt.

I think SDTC is actually a very well-run ship, and it's a real privilege for me to come into such an organization. I think particular credit goes to the CEO, Vicky Sharpe. It's very fortunate how these organizations want to come forward. I think they are facing principally a commercialization challenge. Communication is also important, and there are a number of stakeholders to whom we have to communicate the benefits of SDTC.

I think the clear target of communication is the stakeholders like yourself, the various government funding agencies, the bureaucracy, and the different partners. We need to communicate the benefits of the organization to what they do. That's something which I'm certainly trying to do. I have experience in how these kinds of organizations helped RIM, for example, in the early part of its development.

From what I understand, the mandate is for Canada to grow its share of the global sustainability market from 1% to 2%, and there's something to the tune of 125,000 jobs on the line. That means these companies have to scale globally and commercially. It's a very complex and predatory world, but that's something I have some experience in. I also have a sensitivity in these matters, and I try to help in ways that the stakeholders find constructive.

Thank you.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you.

Mr. Hall, I appreciate your newspaper experience, by the way, having come through newspapers to my current career.

You're a bit of a salvager. You've done a lot of different things in your career, but underlying it all, you're a CA. How will your experience at Indigo, where you were on the board for 14 years, and perhaps you still are...? I don't see quite the connection, but perhaps you can make it for me, between selling CANDUs and selling CanLit.

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Hall.

[James Hall]

Thank you.

Let me approach the answer this way.

Indigo is one of my boards. I've done a lot of board work, so let me just talk about a couple of things, including my experience, knowledge, and expertise because of being on boards.

You're right, in that the foundation for everything is the fact that I'm a CA, so I do know about financial accounting. I'm not a practising accountant, but I do know financial accounting. I know corporate financing, including capital structuring, and I'm a kind of soup-to-nuts guy on things like process policy and procedures. I respect process. You can't work for a company like Arthur Andersen, or particularly Citicorp, unless you do that. When I started up Working Ventures all that stuff had to come out of my head. All investment process, policy, procedure I had to write up before we hired our first person.

I've done a lot of restructuring in one form or another. Almost all non-IPO financings and insolvencies are restructuring of one form or another. I know the venture capital and private equity world, cradle to grave, right from investment criteria and generating deal flow, finding deals, selecting which deals to work on, doing the due diligence, getting the approvals, dealing with the legals, closing the deal, and managing the deal after you've booked it, and finally exiting—cradle-to-grave matters. I know a lot about risk and reward.

I've dealt with managing people at all levels. At Working Ventures, for example, at the height we had 37 professionals working for us, CAs, chartered business evaluators, and people with a lot of education and a lot of good track records in their business careers to that point.

On corporate governance, I'm a committee worker. I'm a worker bee on almost all of the boards I've served on, including at Indigo, where I'm a member of all the committees, and the chair of the HR committee.

That brings—

[The Chair, Conservative, Leon Benoit]

I'm sorry, Mr. Hall, but Ms. Crockatt is out of time. Thank you.

We will go now to Monsieur Gravelle for about six minutes.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you.

Congratulations to Mr. Hall.

My questions, sir, are going to be for you. I want to raise the Fukushima nuclear disaster connected to a tsunami and earthquake in 2011. It was a catastrophe for Japan, for the neighbouring countries, for all, including Canada and the United States, that share the Pacific Ocean.

We talk about Fukushima as a past event in 2011, as if it were over, when it is not. There are very clear and present dangers threatening Japan and many other countries. There are 1,500-plus spent nuclear fuel rods to be rescued and dealt with. There is contamination in the Pacific Ocean without significant inspection checks. There is damage to the ocean and to fish such as tuna where contamination is showing up. There is debris washing up along the west coast, with much more to come. There are potential real disasters still with water in Japan and other countries.

What qualifies you to assure Canadians that Canada is safe from a Fukushima?

[The Chair, Conservative, Leon Benoit]

Go ahead, please, Mr. Hall.

[James Hall]

Thank you very much. That's a very interesting question.

I should start off by saying I've been on the Atomic Energy Board for three months, so at this point in time I cannot say that I know everything I need to know and that I will know after I've gone through a full cycle. You can't possibly go on a board and know everything in three months.

However, my understanding, because I've seen some reporting on this as a board member and committee member, is that through the health, security, safety and environment centres of excellence at Chalk River, they have gone through and worked to try to understand what would happen if something like a Fukushima happened in Chalk River. They have made their assessments as to how they would react to it. They also have determined that exactly what happened at Fukushima would not happen at Chalk River.

I do not have a degree in nuclear physics so I'm probably not the right guy to talk to about this. I bring a different set of skills to the board. I think that particular question would be best taken up with senior management and you'd get a better answer than you can out of me.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you.

I appreciate Canada and much of the world has learned many lessons. It was the multiple effects of Fukushima that were beyond even the brilliance of the Japanese to contend with: tsunamis, earthquakes, water supply, roads, and more. I confess to being a little anxious listening to Canadian government reassurances when the Japanese did the same thing each new day of the disaster, and even now they continue to try to stay ahead of this disaster with reassurances.

What qualifies—

[The Chair, Conservative, Leon Benoit]

On a point of order, Ms. Crockatt.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Sorry, you may wish to provide lots of latitude, but I don't hear a question relating to the competency or experience of our witness here.

[The Chair, Conservative, Leon Benoit]

Ms. Crockatt, I was giving him a little time. Last time he did relate it directly to the appointee's ability to perform his duties. I think he's headed there, and there seems to be enough connection, so perhaps we could just allow him to continue.

Thank you.

[Claude Gravelle, NDP, Nickel Belt, ON]

I am certainly headed there, and I'd like Mrs. Crockatt to be patient.

[The Chair, Conservative, Leon Benoit]

Go ahead, please.

[Claude Gravelle, NDP, Nickel Belt, ON]

I'm not sure where I was with the question, but what qualifies you to assure us that all the possible multiple secondary catastrophes that are likely to happen from Fukushima would not happen in Canada at one of the AECL labs?

[James Hall]

Okay, well, let me answer it this way.

Again, I'm not a physicist, but I do bring some strengths to the board. I'm one member of the board. Again, I bring a number of strengths. I'm usually reasonably calm under pressure. I do have a background in problem recognition and remedial management. I have an instinct for dealing with trouble. I have organizational ability in my background, that is, making sure that the right people are in the right jobs to get the things done that need to be done. I'm a big-picture guy now at this point in my business career, but I am willing to, and do, wade into the detail when it is needed. I'm comfortable with ambiguity, that is to say, in a lot of the things I've done in the past, I've dealt with having to make decisions when you don't have all the facts that you wish you had, but you have to make the call anyway. I'm comfortable working with professionals, including lawyers. I'm comfortable with legal documentation. I'm intellectually curious—at least I'm told this—and I'm certainly intellectually independent. I say what I think. I'm a pretty hard worker. I'm reasonably smart, and with me, people get what they see.

I think I bring a certain perspective to the board. There are other board members. Chalk River by itself, with senior management and in the other labs, has more nuclear experience and expertise and knowledge than almost any other place in North America. We do leave it to those people to run the site.

Our job as board members is oversight, guidance, and advice, and that's what we provide.

If I can say one last thing on this, the management team does report to the board, and fulsomely. We don't just sit down and have people come in and just talk to us. There are reports. There are studies. The meetings go for a couple of days, full days. I think the board's pretty well informed as to what's going on. We rely on that, and I think you also should be able to rely on that.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Hall, and Mr. Gravelle.

Mr. Regan, you have about six minutes. Go ahead.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman, and thank you to our witnesses.

Mr. Balsillie, it's good to see you again.

[James Balsillie]

It's good to see you, Geoff.

[Geoff Regan, Liberal, Halifax West, NS]

One of the questions that I asked our last group of witnesses was to give me an example of how they stood up to authority in some way in their careers. I'm actually not going to ask you that because I think right away, perhaps, about a guy named Gary Bettman, and also of your public comments about the Nortel patents possibly going outside Canada. I think you have already displayed that in the past.

You talked about your interest in environmental issues and sustainable development internationally. Give me examples from your background that will help you when you are on the board of STDC and making decisions about competing early-stage technologies, which ones to pursue.

[The Chair, Conservative, Leon Benoit]

Go ahead please, sir.

[James Balsillie]

Thank you.

The good thing about STDC is that they have a very rigorous process and they have a very good investment board and they have advisers. I'm allowed, ex officio, to sit in on the investment board. There are two, the biofuels board and the sustainable technologies board. I've spent days with each one of them to see how they process.

I have to say that it's a very good board they have, beyond the STDC board, and we as Canadians are fortunate to have them do what they do. I've seen the quality of the team that Vicky Sharpe has built. I'm impressed with them and their commitment and dedication. I think if they went into the private sector, they could probably make more. They have their processes and they evaluate them carefully.

The other thing I'm particularly impressed with by STDC is that they have metrics on what they do, capital they've levered, jobs they've created, sales they've created, and they've been audited many times. I'm impressed by what I've seen in terms of the rigour of the process.

As to what do I bring particularly, I would say my strengths particularly. I have a unique strategic eye, so when somebody has an emerging company, I mentor a lot of people in terms of the strategic navigation, the tactics that go with it. You may have one good bullet in your gun and you can shoot it at a moose or you can shoot it at a rabbit. How you navigate that is something I try to bring to that discussion with them, wishing them well.

I'll feel very good in five years when this term is up if STDC has stayed on its track of bringing more jobs and bringing more sales. Scaling these companies is the really big challenge I see with them. I try to focus on the nexus of hitting a commercially scaling arc. That's something I've done throughout my career.

[Geoff Regan, Liberal, Halifax West, NS]

Thanks very much, Mr. Balsillie.

I'll turn now to Mr. Hall, if I may.

Mr. Hall, one of the things you said was, “I say what I think”. That is actually important in terms of the question I was raising a minute ago, because one of the concerns I have is about the question of medical isotopes. I'd like to ask about experiences you've had that you feel will help you in dealing with issues around medical isotopes. The reason I ask that—I want to give it a bit of a context—is that I was recently talking to a nuclear medicine specialist who is very concerned about what's happening with medical isotopes in Canada and the fact that we're likely to have an international problem in a few years when the NRU at Chalk River shuts down.

Can you give us examples of things that would help me feel that you would be able to advocate aggressively to government on AECL's behalf on various matters?

[James Hall]

Thank you for the question.

That question goes around the edge of a bigger question. That question is what happens to the NRU, the national research universal reactor, that helps create those isotopes.

As you know, the decision has been made that the moly-99 isotopes will be phased out in 2016. At that time the reactor will need to be recommissioned to keep producing non-moly isotopes.

I think it would be great to continue to produce isotopes for all the reasons that you would know, but the decision to get out of moly was made before my time on the board. I wasn't around for the discussion pro and con on that. It's not a question that I am in a position to bring up. The decision has been made. If the reactor is not commissioned past 2016, it'll be a bit of a moot point anyway.