Toronto Port Authority responds to Olivia Chow



    TORONTO, June 8 /CNW/ - Ms Olivia Chow, MP Trinity-Spadina, is holding a
press conference this morning to publicize a purportedly confidential letter
written by four directors to Transport, Infrastructure and Communities
Minister John Baird on March 30, 2009. The letter followed a decision taken by
the board of the TPA on January 21, 2009, to acquire a new, larger passenger
ferry to support the continued success of the Toronto City Centre Airport.
    Ms. Chow's press conference and the letter are part of an ongoing effort
to attack the good reputation of the five TPA Board members who are committed
to fulfilling their fiduciary duty of enhancing the future business prospects
of TPA assets, including the Toronto City Centre Airport.
    Many of the items referred to in the letter have already been widely
reported in the media, and often undermined, in earlier coverage. The letter
gives no consideration to the fine work and effort of the TPA staff and board
to oversee an effective port and thriving airport. TPA Chairman Mark McQueen
has written a response to Ms. Chow advising that allegations made against the
TPA in the March 30th letter are incomplete, unsupported, untrue and, in some
cases, defamatory.
    A copy of the letter to Ms. Chow has been released and is attached.

    The Toronto Port Authority was incorporated on June 8, 1999, as a
government business enterprise under the Canada Marine Act as the successor to
the Toronto Harbour Commissioners. It is a federal public authority providing
transportation, distribution, storage and container services to businesses.
The TPA owns and operates the Toronto City Centre Airport, Marine Terminals 51
and 52, and the Outer Harbour Marina. The TPA also provides regulatory
controls and public works services to enhance the safety and efficiency of
marine navigation and aviation in the port and harbour of Toronto.
    Further information about the TPA is available at www.torontoport.com.



    
    June 8, 2009
    Ms. Olivia Chow, M.P.
    Trinity - Spadina
    House of Commons
    Ottawa, Ontario
    K1A 0A6

    Dear Ms. Chow:

    Re: Toronto Port Authority
    --------------------------

    I understand that you have called a press conference for this morning in
    reference to a letter signed by certain disgruntled members (Mr. David
    Gurin, Mr. Chris Henley, Ms. Michele McCarthy and Mr. Doug Reid) of the
    Board of Directors ("Board") of the Toronto Port Authority ("TPA"). The
    letter in question was sent to the Honourable John Baird, M.P., Minister
    or Transport, Infrastructure and Communities on March 30, 2009 (the
    "Letter").

    At the outset, let me assure you that the Letter is nothing more than an
    effort by a disgruntled minority of our Board to smear the reputation of
    those members of the Board who support the existence of the Toronto City
    Centre Airport ("TCCA") and who voted in favour of a new, larger
    passenger ferry in January 2009. Having lost that battle, their smear
    campaign appears to have become only more outlandish.

    I note that the leak of the Letter to you directly followed last week's
    positive media coverage and public response regarding the concept of the
    construction of a pedestrian tunnel between the mainland and the TCCA.

    Many of the items referred to in the Letter are both picayune and stale,
    having been already widely reported in the Toronto and Ottawa media and
    often undermined in this earlier coverage. Once you discard the half-
    truths and defamation in their Letter, one is left with little more than
    a transparent attack by a subset of the Board, two of whom are seeing
    their terms expire in ten weeks' time. Their retirement present to the
    rest of us is to "burn down the house" on their way out the door, as they
    now recognize that they will not be reappointed to the Board for a second
    term.

    Their Letter gives no consideration to the fine work and effort of the
    TPA Staff and Board to oversee an effective entity and a thriving
    airport. The success of the TCCA was highlighted by positive editorial
    comment from three different major Toronto-based newspapers following the
    April 29, 2009 announcement of the $45 million private sector-financed
    expansion of the TCCA terminal. In addition, the Toronto Star published
    an editorial this morning supporting the construction of a pedestrian
    tunnel to the TCCA, a concept raised by the TPA in May 2009.

    Nor does the Letter acknowledge the fact that the TPA is now profitable
    for the first time since its inception in 1999, and that we've reduced
    the overall cost of the Board of Directors by one third since the days
    when Michele McCarthy was Board Chair and Chris Henley chaired the
    Governance, Nominating and Human Resources Committee. These two
    individuals are key members of the disgruntled Board group who penned the
    Letter.

    As you will come to understand, this is a 'pocketbook issue' of the worst
    kind. As many in the media are aware, a subset of the disgruntled group
    who authored the Letter attempted to raise their own board compensation
    following their appointment to the Board.

    At the March 22, 2007 meeting of the TPA's Governance, Nominating and
    Human Resources Board Committee, Mr. Henley recommended a 66% increase to
    the Board's annual retainer and a 40% increase to the Board's meeting
    attendance fee. Ms. McCarthy and Doug Reid, who were also members of the
    Committee, concurred with Mr. Henley's recommendation, according to the
    official Committee minutes of the session. Although a director at the
    time, Colin Watson was not a member of the Committee and was not present.
    None of Jeremy Adams, Mark McQueen, Sean Morley or Craig Rix were members
    of the TPA Board at the time of this meeting.

    In March 2008, Mr. Rix, Mr. Watson and myself successfully blocked the
    three disgruntled Directors' effort to increase their Board compensation.
    Also in March 2008 - the earliest opportunity - the majority of the
    Board, made up of those members who did not sign the March 2009 letter to
    Minister Baird, took away Ms. McCarthy's excessive $50,000 annual salary;
    a salary she received despite serving only a few hours a month as a part
    time Board Chair. Ms. McCarthy was also dismissed from her role as Chair
    given her belief that her steep compensation was warranted.

    As can be seen in the timeline of their Letter to Minister Baird, the
    complaints by these three disgruntled Directors began immediately after
    Ms McCarthy's salary was removed and the original disgruntled Director's
    fee grab was stopped.

    Although Ms. McCarthy, Mr. Henley and Mr. Reid made up the majority of
    the Board in 2007, they inexplicably found no reason to complain about
    expenses or management spending patterns at the time; they, in fact,
    approved the expenses in question via the TPA's annual budget process.

    In my view, I and the majority of the Board have never been forgiven for
    stopping their fee grab, and sadly it appears that some of the
    disgruntled Directors will throw whatever mud they can dream up to settle
    the score in their waning days as TPA Directors.

    In the case of the TPA's new City of Toronto-appointee Director David
    Gurin, his bias that the TPA and TCCA should be removed from federal
    control is clear, according to an interview published in the December 5,
    2008 edition of The Globe & Mail (the day following his appointment to
    the TPA Board). During that interview, Mr. Gurin was quoted as saying "I
    believe this is a municipal function," although he "(conceded that) his
    view does not square with the reality that the (TPA) is in federal
    hands".

    I understand that you have stated publicly, on many occasions, that you
    share Mr. Gurin's view that the City of Toronto should gain "control,
    oversight and ownership" of the TPA and TCCA; which would ultimately
    achieve your goal of closing the TCCA to commercial airline traffic. It
    must be pointed out that even before Mr. Gurin joined the Board, he held
    the view that the TPA and TCCA should not exist in their current form. As
    such, it should come as no surprise that he has joined the original three
    disgruntled Directors in their year-long campaign to undermine the
    entity.

    In February 2009, the disgruntled Directors were complaining to the
    Conflict of Interest Commissioner about the pending expansion of the TCCA
    (as has already been reported in the media). In March 2009, they are
    telling Minister Baird (via the Letter) that accounting firm Deloitte LLP
    isn't qualified to conduct the Special Audit Examination that is
    undertaken every five years.

    In April and May 2009 they leaked their Letter to media outlets all over
    the Province in a failed attempt to embarrass the federal government and
    those at the TPA who are supporting the TCCA and who took away their
    "cookie jar". With no where else to turn, they appear to have now landed
    at your doorstep in June 2009.

    I trust you will see their Letter for what it truly is.

    To assist you with your analysis, I have attached the following as
    schedules to this Letter. It is necessarily brief given the short amount
    of time between your June 5, 2009 press advisory and your June 8, 2009
    press conference:

    -   Response to the points in the March 30, 2009 letter to Minister Baird
    -   Response to the additional accusations made in your June 5, 2009
        press advisory
    -   Terms of current TPA Directors
    -   Copy of June 20, 2007 letter from Minister Lawrence Cannon to then
        Board Chair Michele McCarthy regarding Mr. Henley's attempt to
        increase Board fees and compensation

    I respectfully ask that you not make or repeat any untrue, unsupported or
    defamatory statements during your press conference at 11:00 am today. If
    you have not independently confirmed any or all of the information in the
    March 30, 2009 letter to Minister Baird, I caution you from relying on
    any portion of it.

    Respectfully,
    TORONTO PORT AUTHORITY
    Original signed by
    Mark McQueen
    Chairman

    Responding to the points in the Appendix of the March 30, 2009 letter to
    ------------------------------------------------------------------------
    Minister Baird:
    ---------------

    Conflict of Interest - as the authours of the Letter well know, the TPA
    received two additional legal opinions (on January 30, 2009 and
    February 2, 2009) that advised their two-pronged complaint was without
    foundation; in essence, the original legal opinion could not be relied
    upon. I note this information was withheld from both you and the Minister
    in the Letter.

    In any event, the January 2009 legal opinion cited by the disgruntled
    Directors referred to votes specifically involving Porter Airlines, and
    not the construction of a new passenger ferry as they now would have you
    believe.

    In addition, the Board passed the motion to acquire the new, larger
    passenger ferry a second time at its April 21, 2009 board meeting, with
    one Board member abstaining. This information, too, has been withheld
    from you by the disgruntled Directors.

    Expenses - This refers to the 2007 & 2008 Harbour 60 hospitality expenses
    that has already received coverage in the media. The record shows that
    the then Board (which included Ms. McCarthy, and Messers Henley and Reid)
    approved the line item in the annual budget. For them to now claim it was
    unauthorized is just untrue. As the media were advised by the TPA in
    January 2009, the Board approved the budget, thereby authorizing the
    specific expense line item.

    As per the TPA press release of January 21, 2009, the TPA has clarified
    the expense policy so that all individual hospitality expenses require
    the approval of the immediate supervisor. The TPA has also asked its
    auditor, Deloitte, to provide any further guidance or advice they feel is
    warranted as per their Special Examination financial audit (which is held
    every 5 years by law).

    Procurement policy - I ask that the disgruntled Directors provide you
    with the excerpts of the specific sections of the Procurement Policy that
    were allegedly breached, as it appears to me that this accusation is
    without foundation.

    Information Flow - there in nothing unusual about Board Committee
    material being shared solely with members of the Board Committee in
    question.

    Board Minutes - the outstanding 2008 Board Minutes were passed by the TPA
    Board in June 2009. The Board minutes reflect the material decisions
    taken at the meetings.

    Information selectively disclosed - this is a non-specific complaint.

    Audit Committee access - our auditors have taken many private telephone
    calls from Directors (regardless of who from the Board calls) and are
    always available to meet with the Audit Committee without management
    present; Mr. Henley had such a meeting in December 2008, for example,
    when he was a member of said Committee. Of interest, Mr. Henley was
    scheduling another telephone call with the Auditor as recently as June 4,
    2009, for example.

    Board counsel termination - based upon legacy legal files, the TPA has a
    large retinue of outside legal counsel; in an effort to control costs,
    the TPA is moving to an RFP process for the TPA's legal work. The January
    2009 vote to terminate Carol Hansell and her team at Davies Ward Phillips
    and Vineberg LLP was connected to that effort and also reflected the fact
    that in a space of two years, Mr. Henley remarkably ordered up over
    $225,000 of corporate governance legal work from Ms. Hansell. As the TPA
    and its successor entities have been in existence since 1911, it is
    foolish to suggest that Davies' termination, after just two years of
    involvement with the TPA on governance matters, represents a "loss" of
    "corporate memory".

    Illegal chair election - several print media outlets have reported on
    this story to death, accurately or otherwise; the Davies legal opinion
    was narrow in its review and for that, among other reasons, it was not
    relied upon.

    Responding to the additional points in Ms. Chow's June 5, 2009 Press
    --------------------------------------------------------------------
    Advisory:
    ---------

    Interference from the previous Minister's Office - during the summer of
    2007, the office of then Transport Minister Lawrence Cannon learned of
    the attempt, led by Mr. Henley on behalf of the disgruntled Directors, to
    raise their board compensation. Minister Cannon wrote to the Board on
    June 20, 2007 (before I, Mr. Adams, Mr. Morley, and Mr. Rix joined the
    Board), then Chaired by Ms. McCarthy, and cautioned against this action.
    Mr. Henley advised staff that "it was within their power" to raise their
    own compensation, and initiated a $50,000 investigation by Carol Hansell
    of Davies, Ward, Phillips and Vineberg LLP to attempt to learn the
    identity of the individual who advised Transport Canada of Mr. Henley,
    Ms. McCarthy and Mr. Reid's attempt to increase their board compensation
    (this $50,000 expense is a subset of Mr. Henley's $225,000 corporate
    governance legal invoice tally with Ms. Hansell's law firm over a two
    year period). In March 2008, Mr. Henley advised one director that the fee
    increase "was a done deal". Directors McQueen, Rix and Watson did not
    support the effort to increase Board compensation, and Mr. Henley's
    effort ultimately failed.

    Legal Counsel retention - the law firm in question was retained by TPA
    management, and not "a few board members". This engagement was completely
    within the framework and authority of the TPA Purchasing Policy. No
    "standing policy" was ignored.

    Travel expenses - the aggregate amount of the former TPA CEO's 2007 and
    2008 travel expenses were $51,000, and not $80,000 as per your Press
    Advisory of June 5, 2009. These expenses were normal for a business of
    this size.

    Current Director Appointment Tenure
    -----------------------------------

    Mr. Jeremy Adams: 1/14/09 - 1/14/12

    Mr. Chris Henley: 8/23/06 - 8/22/09

    Mr. David Gurin: 12/4/08 - 12/4/11

    Ms. Michele McCarthy: 7/14/04 - 7/13/10 (two terms)

    Mr. Mark McQueen: 8/23/07 - 8/22/10

    Mr. Sean Morley: 12/19/08 - 12/18/10

    Mr. Douglas Reid: 8/23/06 - 8/22/09

    Mr. Craig Rix: 2/2/08 - 2/1/11

    Mr. Colin Watson: 8/23/06 - 8/23/11 (two terms)
    





For further information:

For further information: Derek Raymaker, Daisy Consulting Group, (647)
504-0107


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