Public Accounts Committee on Nov. 29th, 2016

[L. Anne Galbraith]

It's not on our website, no.

[Chandra Arya, Liberal, Nepean, ON]

I can understand that with respect to the board, because you have industry representatives. What about the management?

[L. Anne Galbraith]

You mean the management's conflicts?

[Chandra Arya, Liberal, Nepean, ON]

Yes.

Maybe Mr. Griffiths could elaborate on that.

[Capt Sean Griffiths]

There wouldn't be any conflicts for management. As Ms. Galbraith said, the composition of the board includes an industry representative. He might own ships that we have pilots on. That could present a conflict, or he might operate a terminal that we visit with pilots, and that might present a conflict.

[Chandra Arya, Liberal, Nepean, ON]

This information on the conflicts of the board members is not publicly available.

[Capt Sean Griffiths]

No.

[Chandra Arya, Liberal, Nepean, ON]

How do you compare with the Pacific Pilotage Authority in the tariffs they charge or in manpower costs?

[Capt Sean Griffiths]

Their tariff structure is quite a bit different from ours, if I recall. A lot of it is based on the draft of ships. They also have body corporate pilots instead of employee pilots. They cover a vast coastline of B.C., not individual ports like the APA does, and we try to make each—

[Chandra Arya, Liberal, Nepean, ON]

So it is difficult to compare how Canada stands there.

[Capt Sean Griffiths]

It's very difficult to compare.

[Chandra Arya, Liberal, Nepean, ON]

Okay, I understand that.

You operate a monopoly and Mr. MacArthur mentioned that the last ships are coming in now. The tariffs that were added, do you think they are going to be reduced this year?

[Capt Sean Griffiths]

If the tariff model suggests that the revenues are climbing because of that, then yes, the tariff model will come down. Typically it's not there long enough to see a decrease in ships like that, so it most likely will stay.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

We'll now move to Mr. McColeman, for a five-minute round.

[Phil McColeman, Conservative, Brantford—Brant, ON]

The OAG found that the corporation did not have a process in place to ensure that it performs its own annual inspections of all pilot boats, owned and contracted, in keeping with its past practice, to provide assurance of quality and continuous improvement.

Can you explain why this at one time was a practice and then became a deficiency?

[Capt Sean Griffiths]

Yes, I can. We executed a year, 2015, without completing all the inspections, because of logistics and operational constraints. Of course, the turnover in personnel had an impact as well. There are a couple of pilot boats left outstanding to inspect.

[Phil McColeman, Conservative, Brantford—Brant, ON]

It boiled down to two being missed.

To get back to governance and the makeup of the board, it has two industry representatives. Are these representatives who are currently working in the industry or are they retired?

[L. Anne Galbraith]

Correct.

[Capt Sean Griffiths]

They are retired.

[Phil McColeman, Conservative, Brantford—Brant, ON]

They are working in the industry.

Immediately, that strikes me as their having a conflict of interest, a very large conflict of interest. In fact, I think the chair of your board alluded to it by saying that when it came to tariffs, certain board members argued against tariffs, which would indicate that they have a special interest in making sure tariffs were kept lower than perhaps what the board recommendation for management had been.

How does it work in your board meetings when you're dealing with issues? Do these people recuse themselves and walk out of the room 10 times during a meeting because they have a conflict of interest? What's the deal here?

[L. Anne Galbraith]

What I would say is I know that some of our board members are also our stakeholders, and when I was referring to stakeholders, I was actually thinking more about the Shipping Federation, which can be interested in keeping our tariffs low for their clients, their members.

With regard to their recusing themselves, we haven't had them recuse themselves. We've asked. At the start of the meetings, we are now asking people to declare any conflicts of interest. They haven't recused themselves, because we have other members of our board who are there and can challenge them.

[Phil McColeman, Conservative, Brantford—Brant, ON]

I'm just going to relate to a few boards that I've served on in my life—a university board of governors, industry-wide Canadian Home Builders'. These are basic things. Those people should not be allowed to be part of those discussions, and I'm sorry, but it should not take other board members having to challenge them on certain issues. This just seems like a basic practice of conflict of interest. If that is the case, what you just said, that is absolutely out of line with Robert's rules, or any set of rules you'd like, in respect of overall board governance.

[L. Anne Galbraith]

This is the board that I'm required to have under the Pilotage Act. That's what I have to have, two industry members, two pilots. Now they're retired pilots; before they used to be full-fledged pilots who were employed by us.

[Phil McColeman, Conservative, Brantford—Brant, ON]

I'm going to go to the Auditor General's representatives.

Mr. MacLellan, what are your views on this type of governance set-up? This seems to me to be almost incestuous.

[Clyde MacLellan]

First off, this is what we refer to as a representational board. There are a few crowns that have a similar type of circumstance. We are concerned, as outlined in the report, that the very basis of a representational board can create some challenges in terms of the perception of the conflicts of interests. That is why we recommended that actions be taken to deal with and try to mitigate those perceptions. We recognize that in many cases there may be legislative change necessary to try to respond to those on a more holistic basis. In the meantime, we think what is important are the processes by which to manage the apparent conflicts you have identified that appear in that circumstance.