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Power authority chief stirs conflict-of-interest fears

Tyler Hamilton - The Toronto Star - Aug 15, 2007

Critics of the Liberal government are screaming foul that John Beck, the top executive at construction giant Aecon Group, has been elected chair of the Ontario Power Authority as the province embarks on a $40 billion upgrade to the electricity system that includes new nuclear plants.

Aecon is the largest publicly traded construction and infrastructure company in Canada, and a major player in Ontario's energy sector.

One of its biggest projects, a $200 million contract through a joint venture with engineering firm SNC Lavalin Inc., is the multibillion-dollar refurbishment of the Bruce A nuclear reactors - a controversial deal inked with the power authority in October 2005.

Beck, whom the energy minister appointed as a director of the power authority's 10-member board in May 2005, was quietly elected chair two months ago by fellow board members. There was no official announcement of the change.

Even Beck, who is chair and chief executive of Aecon, saw potential problems with the appointment.

"I was concerned about perception of conflict," he said in an interview, explaining that he approached the province's integrity commissioner for advice and was told, in writing, that there was no conflict.

However, he has agreed to step aside from any board issues that he regards as a possible conflict of interest.

"This is quite extraordinary," said New Democrat environment critic Peter Tabuns. "There's the perception that you've got the fox guarding the chicken coop, and a guy who wants to go big on transmission and generation."

The role of the power authority is to plan for and procure new generation, as well as strike electricity purchase agreements with large power producers. The agency is also responsible for planning future development of the electricity system, including new transmission and major power-generation projects that represent potential business for companies such as Aecon.

Tabuns said the optics of having a top Aecon executive at the head of the power authority's board, an otherwise diverse and experienced group, don't look good just two months before an election. It also sends a bad signal, he said, at a time when the province should be giving priority to renewable energy projects and distributed generation.

Premier Dalton McGuinty should know better, he said. "I don't know why McGuinty wants this headache."

Tom Adams, executive director of Energy Probe, said it was "shocking" to learn of the appointment. "It's an obvious and drastic conflict of interest, and I can't believe the provincial government thought it would be appropriate."

But the energy ministry and the power authority defended the appointment.

Steve Erwin, spokesperson for Energy Minister Dwight Duncan, said it's not unusual to have board members with expertise and in some cases influence in the sector they oversee.

"He was elected by the board, and was already a board member when appointed, so if people think there's a controversy, they certainly didn't say so when the OPA board was first established," said Erwin.

"Minister Duncan has much respect for Mr. Beck and has absolutely no doubts whatsoever about his integrity and leadership."

The chair has no executive authority. "He represents, along with management, the board's view to the ministry," said power authority spokesperson Tim Taylor. "It's a slightly different role than you'd see of a chairman in a private-sector organization."

Beck said he was flattered when a number of fellow board members elected him as chair, pointing out that the minister played no role in the decision. He said his experience dealing with government and running the board of a large public company is what got him the job.

But according to the Electricity Act, the power authority's directors "must be independent of participants in the electricity sector."

Erwin said he wouldn't define Aecon as a "participant" because the company is a global organization involved in many sectors, while Beck said the power authority would never make a decision where Aecon is directly involved.

But Andrew Stark, a professor of political science at the Rotman School of Management at the University of Toronto, said the rules don't distinguish between indirect and direct involvement when it comes to conflict of interest.

"The general rule of thumb would be that, if somebody holding an official position has the capacity to participate, even if he's not the sole decision maker, in a decision that can affect the financial interest he has or is associated with, then there's a conflict of interest," said Stark.

Aecon's participation in Ontario's energy markets was made clear on June 19 when Beck spoke at the company's annual meeting.

"We have a hand in building, expanding and maintaining virtually every form of power generating facility used in the province - from the early hydro facilities to natural gas and co-generation plants, to the Bruce Nuclear facility," he said.

He said the company completed $75 million worth of power construction projects in Ontario. The company's order backlog, he added, "has another $100 million worth of work scheduled for future periods."

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