Sunday, February 25, 2007

The IEC: The bad and the ugly - No good here

Every half-way serious blog on NL affairs (and some silly ones too) are all abuzz over a great Telegram coup: a feature-length and detailed retrospective of the antics of the IEC.

I know I rag on them from time to time but the reality is that the Telegram stands head and shoulder above all print media alternatives. I tip my hat to them and especially the author, Rob Antle.

The full story is here (let's hope they leave it up for a while but reprinted below in case it's not).

If there was ever an argument for a full public inquiry, this is it.

Expect the fall-out from this story to carry on for a while assuring this government another bad week as we go into another by election.



ROB ANTLE, The Telegram
Saturday, February 24, 2007

Behind closed doors

The province’s MHAs privately changed the rules on their entitlements over the years, reducing transparency and accountability - and setting the stage for the spending scandal that now grips the province. Here's the story of how that happened.

The politicians on the legislative committee governing the House of Assembly were not pleased.

A newspaper article had dared to raise questions about constituency allowance spending by Newfoundland and Labrador MHAs.

The story questioned what the members were claiming as legitimate expenses - reportedly snowmobile suits, sweatsuits and running shoes, for example - and the secrecy shrouding the system.

The members of the Internal Economy Commission, or IEC, were so unhappy they considered compelling the newspaper reporter in question to appear before the bar of the House for questioning.

There he would testify; there he would reveal the source of his information.

This sequence of events did not happen in 2006, when Auditor General John Noseworthy began dragging the murky secrets of constituency allowance spending into the cleansing light of day.

Try 1991.

Reporters were asking questions about constituency spending 16 years ago.

But they weren't getting answers.

And the system was set up to keep it that way.

The politicians who made the rules would also enforce them, effectively with zero oversight.

As the years passed, MHAs quietly slid beneficial rule changes through the legislature. They ultimately passed a law allowing themselves carte blanche to bump benefits as they pleased, without even having to go to the House.

They also unanimously passed legislation taking the oversight of the comptroller general out of the claims process.

That same law change now infamously allowed the IEC to keep the prying eyes of the auditor general out of the books of the House.

Constituency allowances were surrounded in secrecy from the beginning. That secrecy grew worse over the years.

And a direct line can be drawn between that secrecy and lack of accountability and where we are today - with the Royal Newfoundland Constabulary conducting no less than six investigations of former or current politicians and companies, and Newfoundland Supreme Court trial division Chief Justice Derek Green set to recommend changes to the system that allowed it all to happen.

Green will look forward, at the way things should work in the future.

What follows is a look back, at how we got here.


In April 1989, the Clyde Wells Liberals ended 17 years of Tory rule. A month later, new Speaker of the House Tom Lush announced the creation of a commission to examine MHA salaries and benefits - an initiative that dated back to the previous government.

According to Telegram reports at the time, Lush noted that Newfoundland politicians were underpaid compared to their peers elsewhere in Canada in virtually every area - salary, indemnity and allowances.

Former Memorial University president M.O. Morgan was selected to head the panel. Morgan said no public hearings would be held.

MHAs at the time received a sessional indemnity of $28,811, plus a tax-free allowance of $14,405. They were also entitled to a district allowance of between $1,200 and $6,000, depending on the geographical makeup of the area they represented.

The commission examined whether politicians' salaries and benefits were enough to attract "individuals of the needed quality" into public life.

The Morgan report noted the "dramatically increased" demands placed on MHAs by their constituents, and the growing complexity of the job.

"Steps must be continually taken to lure capable and competent men and women into the political arena," the report noted.

The Morgan report raised MHA salaries to $35,000, and the tax-free allowance to $17,500 - an increase of more than 20 per cent. The report advised tying future raises to those in the government's executive payment plan.

The commission acknowledged it could be criticized for setting the salary bar too high: "... there may be, no doubt, those who will protest that our recommended level of remuneration is too high, that it will in fact attract undesirables who have no desire to contribute but to receive."

But the panel stood by its decision.

More critically, the Morgan report wiped out the district allowance, and replaced it with a new constituency allowance system.

It set down the rules for members' travel - both to and from their districts, and within them.

The commission broke such expenses down into a number of categories. It recommended payments of per-diems for rural members when the House was in session. It also enacted severance pay for any MHA who served at least seven years. And it recommended payments for serving on legislative committees.

But most importantly, it advised the creation of an "accountable constituency allowance," with the IEC determining the amount.

The recommendations of the Morgan report were "final and binding."

The report's authors acknowledged that the constituency allowances, in particular, could be difficult to govern, especially in the realm of travel claims.

Their words would turn out to be prescient.

"We are aware, of course, how difficult it is to police expenditures where receipts may not be provided, as for car mileage, and the tendency for the public to mistrust. Though honesty cannot be legislated, exposure to the attempt to defraud should be reduced to the minimum possible.

"Receipts should be required, and if no receipts are submitted for certain types of expenditure, some form of verification should be provided. For what is at issue is not the honesty of the individual member, even though sometimes the odd case of false claims may occur, but the confidence of the electorate."

Years later, a committee of politicians would change the law, and make a mockery of that warning.


In 1990, the IEC - which is comprised of Tory and Liberal MHAs, a majority of them from the government side - set the maximum amount for constituency claims at $7,500.

The committee also imposed rules on how that $7,500 could be spent.

Up to $5,000 could be used for things like office rentals, secretarial assistance, furniture, equipment and office supplies. Receipts were required.

A maximum of $1,000 could be spent on non-partisan newspaper and radio advertising, flags, pins and Christmas cards. Again, receipts were required.

The remaining $1,500 was discretionary, but required receipts.

The $7,500 limit on constituency spending remained in place throughout the Clyde Wells era.

It did not include travel benefits, such as mileage and per diems.

Over the next number of years, the IEC made a number of decisions that collapsed different categories of allowable expenses into each other.

But for the most part, there appeared to be few changes that significantly bumped benefits during the Wells era.

MHAs even took pay cuts in the early 1990s, for example, when the Wells government brought in a severe austerity program.

But no details of constituency spending were made public, other than the total amounts spent.

And there were a couple of controversies generated by the new expense account regime.

On July 14, 1991, the Sunday Express first raised questions about how MHAs were spending the constituency cash. Then-Speaker Tom Lush rejected the newspaper's request for detailed receipts. The province's freedom of information laws did not then - and do not today - cover the House of Assembly establishment.

The IEC was so irked at the Express story it considered dragging reporter Russell Wangersky before the House to explain himself, according to a serving MHA at the time with knowledge of the situation.

Days later, then-NDP leader Jack Harris made public details of his own constituency spending. Harris won passage to the House in a December 1990 byelection. He spent $625 - $416 on a dictaphone, $113 on UNICEF Christmas cards and $95 on photography at Government House.

"I think the answer to it all is to encourage everybody to disclose (their receipts)," Harris said in 1991.

But that didn't happen.

Although the IEC did not make the reporter testify, the commission issued a withering refusal to further inquiries about constituency spending details.

Not much further public attention was cast on the constituency claims system until 1994.

Wangersky, then with the CBC, reported on a controversy involving Liberal cabinet minister Tom Murphy. Murphy represented a St. John's district and voted in the St. John's municipal election, but claimed his permanent residence was in Tors Cove. That qualified him for additional constituency cash.

The story made a splash, but Murphy vowed to quit politics before changing his residence in Tors Cove, and no action was taken.

A few months later, on April 12, 1995, members of the IEC "directed the clerk to prepare in detail a review of the various recommendations of the Morgan commission report with a view to rationalizing the system."

The calendar pages were turning. The Clyde Wells reign was drawing to a close, and the Brian Tobin era was set to open.

Many changes to the constituency claims process were in the wings.

And those changes would fundamentally alter the system - in retrospect, not for the better.


In early 1996, the IEC said it would reduce travel and constituency allowances for members.

But the commission also decided to proceed with a new "block funding" scheme for constituency claims.

Pre-1996, there were capped limits on claims in certain categories.

Post-1996, those category caps were removed.

Before, MHAs could spend a maximum of $7,500 on things like newspapers, advertising, pins, flags, office rentals and equipment.

After 1996, that cap no longer existed. If an MHA's overall allowance, including travel, was $15,000, they could spend the entire amount as they saw fit.

The new rules also clarified that it was OK for MHAs with a second home to claim accommodation expenses if that home was "within reasonable proximity of his or her district."

And they set the global constituency spending limits for 1996-97. The lowest were a number of St. John's area districts, at $8,000. The highest were Cartwright-L'anse au Clair and Torngat Mountains in Labrador, at $63,600.

The IEC also permitted MHAs to claim $2,000 per year from their constituency allowances without receipts, for "miscellaneous expenses."

In June 1996, the Tobin government passed an amendment to provincial law allowing the IEC to vary travel and constituency allowances "in accordance with rules made by the commission."

In other words, the IEC could make the rules, and change the rules, as it saw fit.


Two more years passed before members of the IEC again decided it was time to look at the constituency spending system.

The IEC created a sub-committee to review constituency allowances for "members who appear to be having difficulties with their allotments." Its three members were Tory MHA Loyola Sullivan, Speaker Lloyd Snow and Liberal MHA Melvin Penney.

The sub-committee reported back a couple of months later, in June 1998. Its report was adopted by the commission. But IEC minutes contain no details of what was actually in the report.

Later in the year, members of the IEC discussed, behind closed doors, a proposed salary increase for MHAs. The commission ordered that the IEC Act be amended to provide for the same wage hikes recently negotiated with public sector workers - seven per cent over three years.

Just how all parties went about legislating that change speaks volumes about how politicians preferred to deal with salary and benefit bumps.

On Dec. 1, 1998, immediately after question period - with the press gallery empty, as reporters scrummed ministers - Government House Leader Beaton Tulk introduced amendments to the Internal Economy Commission Act.

There was no debate. MHAs voted themselves a pay raise in 41 seconds, retroactive to the beginning of the fiscal year eight months earlier.

In early 1999, the province went to the polls. The Tobin government was re-elected.

Soon after, the IEC again re-examined constituency benefits.

The 1999-2000 fiscal year turned out to be the time frame that put paid to any semblance of transparency and accountability in constituency spending.

Benefits would climb rapidly. More legislative changes were in the works to further thwart public disclosure of IEC decisions, and give the commission more power to make up its own rules on increased entitlements.

Meanwhile, the auditor general was taking an interest in members' constituency spending.

And that interest would set into motion a chain of events that ultimately led to the swirl of controversy that envelopes the legislature, and the province, today.


Shortly after the election, on March 10, 1999, the IEC decided it was time for another review of constituency allowances.

A sub-committee of the IEC - this time Speaker Lloyd Snow, Liberal cabinet minister Paul Dicks and Tory MHA Tom Rideout - was created to review allowances for the upcoming 1999-2000 fiscal year.

The IEC discussed that sub-committee report two months later, in early May.

The commission decided to adopt its recommendations.

Those included an increase in the "discretionary" amount of constituency spending - the cash payment not requiring receipts - to $3,600 from $2,000.

Other measures outlined in the report remained murky.

The commission "by order adopted another recommendation of the report of the subcommittee," but neglected to mention in meeting minutes what that recommendation was.

The IEC also raised travel rates, in accordance with increases adopted by Treasury Board.

Weeks later, the IEC reviewed a draft bill to again amend the Internal Economy Commission Act.

Within days, Government House Leader Beaton Tulk tabled Bill 19, noting that "we have unanimous consent in the House to do this under a certain condition."

Tulk noted that times had changed since the Morgan commission reported on MHA benefits and salaries a decade earlier.

"It has created some problems for us," Tulk noted. "The world has changed so much since then. We now have 48 members where we once had 52. There are provisions in the Morgan Commission which do not enable us as an IEC to see that members are given the kind of resources they need to carry on their duties."

Tulk stressed that bill was not aimed at increasing salaries.

"Basically what we are interested in here is creating a situation where members in the House generally can decide on the general apparatus they need to put in place so they can carry out their duties as members."

Loyola Sullivan, then Opposition House leader, said he would "certainly echo the sentiments there in this particular bill."

Then-NDP leader Jack Harris noted that the IEC needed "flexibility with changing circumstances" to look after the needs of the House.

The repeated emphasis on the salary issue was a bit of a Jedi mind trick - the previous year's amendment to the IEC Act had already legislated wage increases through 2001.

It was also a lie. Within days, the IEC raised salaries for some MHAs anyway.

Bill 19 gave the commission the unfettered ability to hand out cash to MHAs as it saw fit.

And it set off an orgy of IEC activity within days of its passage, as the committee did just that.


Bill 19 contained only three changes, but all of them would prove devastating to openness and accountability.

The first delayed the deadline for public disclosure of IEC minutes by nearly six more months, changing the accountability provision from sluggish to glacial. Some meeting decisions would now not be made public for two years.

The second effectively neutered the "final and binding" nature of Morgan-style panels examining MHA benefits. The change meant the IEC could now "implement the recommendations with or without the changes the commission considers appropriate."

The third gave the IEC sweeping powers: "The commission may make rules respecting indemnities, allowances and salaries to be paid to members and staff of the House of Assembly."

Bill 19 received royal assent on May 27, 1999.

Days later, on June 1, the IEC met. It used its newfound powers to distribute the wealth.

The commission launched a review of severance rules. It also increased salaries for MHAs holding specific offices, to match the general salary increases that the legislature had quietly voted for a year earlier.

The IEC gave raises to the Speaker, the deputy Speaker, the deputy chairperson of committees, the leader of the Opposition, the Opposition House leader, the chair and all members of the public accounts committee, and the party whips.

On June 23, the IEC raised the threshold on when equipment and furniture purchases would become property of the House, and not the property of the MHA.

The limit doubled to $1,000 from $500. Anything under $1,000 would now be the property of the politician, and not the public. But after three years, even items over $1,000 would become the property of the member.

The same day, the commission revoked the existing severance policy.

The IEC made all departing MHAs eligible for severance; before, only those who had punched in seven years of service qualified for payments. The commission also jacked up severance benefits, doubling the maximum payment to a year's salary. It also added severance payments for office holders of the House, such as the Speaker, House leaders and whips.

But the commission wasn't done there.

The IEC also created new positions for MHAs, with generous new salaries.

The parliamentary secretary to the leader of the Opposition would get a $14,500 stipend. So would the leader of a parliamentary group. Two caucus chairs would receive a cool $10,000 each.

The IEC also raised salaries for the government and Opposition whips to $10,000.

The chair of the public accounts committee got a bump to $10,000; the vice-chair, $8,000; and members of the PAC, $6,000.

To add the fiscal cherry on top, the IEC advised the Department of Finance that all of these sinecures would be considered pensionable income.

The hits kept coming.

On Nov. 17, the IEC created another new position - parliamentary secretary to the Government House leader. Salary: $14,500 per year.

On Nov. 24, the commission jacked up travel rates.

On Dec. 15, it raised all MHAs' constituency allowances for the nearly finished fiscal year by four per cent. The IEC also decided to review the allotments again before the beginning of 2000-01.

On March 2, 2000, it revoked years-old edicts against travel and accommodations benefits for public accounts committee members, allowing MHAs to make claims for additional cash.

On March 15, 2000, the IEC did what it appeared to do best - strike another sub-committee to review constituency amounts. The new sub-committee was tasked to do so for the just-ending fiscal year of 1999-2000, as well as the upcoming 12 months. Speaker Lloyd Snow, Tory MHA Tom Rideout and Liberal Beaton Tulk were the members.

The troika were told to "review the accounts of the House and if there are savings in other accounts to transfer those funds to the members' travel and constituency accounts where there is a demonstrated need."

In other words, the politicians would raid savings in other areas to give themselves additional expense money.

A week later, on March 22, the IEC tabled the constituency allotments for the 2000-01 fiscal year.

It also revised the 1999-2000 totals, even though that fiscal year was just days from being over, giving some districts a hefty bump in allowable spending. The higher totals remained in effect for 2000-01 as well.

Port de Grave, for example, had maximum constituency spending of $19,700 in 1998-99; the retroactive raise for 1999-2000 put the new total at $31,200. That's an increase of 58 per cent.

It was a similar story for other districts.

St. John's Centre: up to $14,500 from $8,100. An increase of 79 per cent.

Humber West: up to $39,500 from $28,400. An increase of 39 per cent.

The IEC also adopted another recommendation of the latest sub-committee: that the "discretionary" portion of constituency allowances be increased again, to $4,800 a year from $3,600.

That's the amount available to MHAs without receipts; the total did not include HST, effectively making it closer to $5,500.

The IEC also axed the monthly limit on "discretionary" funding.

In just nine months, between June 1999 and March 2000, the IEC voted to provide politicians with a grocery list of new benefits and entitlements.

It did so behind closed doors, with public disclosure delayed months or years from the dates those decisions were made.

But at the end of that period, in March 2000, an unwelcome visitor arrived at the IEC - the auditor general, Elizabeth Marshall.


Throughout the 1990s, the Internal Economy Commission - the group of Tory and Liberal MHAs charged with administering the finances of the legislature - altered the recommendations of an independent panel report on MHA remuneration.

They quietly bumped benefits. They reviewed changes to the act governing the commission - changes which gave the IEC more power, and subjected it to less oversight. Those changes unanimously passed the legislature.

In early 2000, the auditor general, Elizabeth Marshall, began an audit of House accounts.

The first reference to this audit is found in IEC minutes of March 2, 2000. According to meeting minutes, the commission decided to research the appropriateness of Marshall's request to look at the books.

The same day, the IEC asked officials to discuss with the comptroller general how the House's financial documents were handled.

Two weeks later, the IEC met again. The commission deferred its decision on how it would handle the auditor general's request.

The commission also told the secretary of Treasury Board to divide the functions of the comptroller general's office. The House of Assembly would handle its own accounts.

On May 9, the IEC reviewed draft legislation, which it then signed off on.

Three days later, the legislature rammed through changes to the IEC Act. All three parties supported Bill 25.

"I don't intend to belabour the points in this bill much except to say that some of the language that we see in laws governing the Internal Economy Commission Act dates back to Responsible Government days," Government House Leader Beaton Tulk said.

"What this bill clearly does is set out the duties of the IEC and the kind of duties that the IEC should carry out. They are more clearly defined in this bill. I would ask my colleagues to quickly move on passing the bill."

They did. It took about five minutes to pass Bill 25.

The NDP's Jack Harris said he was satisfied with the changes.

Then-Opposition House Leader Loyola Sullivan called the bill "pretty straightforward and pretty routine," noting that it allowed for annual audits and "increased accountability."

But nothing could be further from the truth.

Here's what that "straightforward" piece of legislation did:
  • changed the language of the law so that the IEC no longer required the approval of the finance minister for its spending estimates on things like MHA salaries and other expenses.
  • directed that all House spending come from the government's general pot of money, the consolidated revenue fund.
  • gave the IEC control over what documents would be supplied to the comptroller general in order for payments to be made, and prohibiting the comptroller general from questioning those documents.
  • allowed the IEC to choose who would audit the books of the legislature, thereby permitting it to bar the auditor general.
Not much happened for the next couple of years. The IEC continued to agree on more benefits.

In December 2000, it raised constituency allowance amounts yet again, this time by five per cent.

In August 2001, the IEC authorized salary increases of 15 per cent over 2-1/2 years for MHAs, officers and staff of the House. The hike matched the collective agreement reached between government and its public-sector unions.

Then 2002 came, and the impending release of a report by the auditor general.

That report would paint a much different picture of events than the one contained in IEC minutes.

And it prompted a promise by a politician - a promise that, when carried through, would ultimately break wide open the constituency entitlement enigma.


The official IEC version of events from 2000 was something like this - the auditor general asked to look at the books, the commission considered it, and ultimately decided an independent auditor should do the job. No harm, no foul.

The version of events outlined by the auditor general was less, well, routine.

In a report released in early February 2002, Auditor General Elizabeth Marshall said her staff had attempted to carry out a regular audit of constituency allowances two years earlier. The AG had always been granted access to such information, she noted. But this time turned out differently.

Instead, auditors were ejected from the House. The amendments to the IEC Act - changes that allowed the commission to bar the AG for good - whooshed through the legislature soon afterward.

The decision, Marshall noted, meant that she could not look at any supporting documentation for the $1.7-million constituency allowance budget.

Marshall told reporters on Feb. 1, 2002, she had concerns with certain expenses claimed by an MHA, involving artwork and wine. (Her successor as AG, John Noseworthy, would later shed more light on the situation, saying it involved purchases of more than $30,000 in artwork and over $5,000 in wine by a then-Liberal cabinet minister.)

Marshall said she had problems with the key changes to the act in 2000 - the removal of her staff and the removal of the comptroller general's oversight from the constituency claims process.

"Both of those processes have stopped, so in fact there's two steps backward in the accountability process," she said in 2002.

"Right now what is provided to the comptroller general is just sort of a blank sheet of paper saying please pay (this amount) to so and so."

The IEC was less than thrilled with this assessment of the situation. On Feb. 4, it issued a terse statement defending the 2000 decision to keep the AG out.

The IEC met three times between Jan. 29 and Feb. 11. There are no minutes of those meetings, other than the fact that no decisions were made.

On Feb. 15, the commission agreed that the Speaker would speak publicly on behalf of the IEC for its decisions.

Meanwhile, the Tory members of the IEC - Ed Byrne and Loyola Sullivan - were in a bind.

Their leader, Danny Williams, told The Telegram on Feb. 6 that he supported opening the books.

"They can retain their independent auditor and that's fine. I understand that is the course of action they have taken, but there is no reason the auditor general can't go in there," Williams said.

"How can I advocate openness and accountability and then try and hide members' expenses and members' allowances? I have nothing to hide, so let them go in."

The majority Liberal members of the IEC charged that Byrne and Sullivan supported the 2000 decision.

Within weeks, the IEC reaffirmed the decision to bar the AG.

Speaker Lloyd Snow indicated that stand got unanimous consent.

Williams, leader of the PC party, was against it, but was not a member of the IEC.

Sullivan contended he did not support the 2002 IEC stand to keep the AG out. But there is no reference in IEC minutes to any difference of opinion.

After the dust settled on the controversy, the IEC fired a shot across the auditor general's bow. In early March, it threatened the AG's office with a five-per-cent salary cut and an eight-per-cent reduction in operating expenses.

The most important outcome of the whole affair? Danny Williams made a promise - if he won power in the coming election, he would direct his majority members of the IEC to let the AG back in.

And when the AG got back in, some shocking details of what had been happening at the House of Assembly began to filter out.


On Oct. 21, 2003, the Progressive Conservatives swept to power with 58.7 per cent of the popular vote. Two weeks later, Danny Williams was sworn in as the ninth premier of Newfoundland and Labrador.

In March 2004, the IEC reviewed a report prepared by the new Speaker, Waterford Valley MHA Harvey Hodder. Its title would soon prove especially topical - "Accountability and its Relevance to Members' Constituency Allowances."

The newly constituted IEC began rolling back some of the benefits its predecessors had put in place.

The bulk of this activity took place in a meeting on March 1, 2004.

Firstly, the commission cut all constituency allowances for 2004-05 by five per cent.

It then cut the "discretionary" spending amount for MHAs - to $3,000 from $4,800. (A month later, the IEC would reduce that amount to zero, requiring receipts for all constituency expenses.)

The commission dropped the threshold on when equipment and furniture purchases would become property of the House, back down to $500.

The IEC also decided to develop a handbook of rules, restrict MHAs from having more than three months of their allowance in advance, and provide members with written monthly statements of their account status.

The commission issued a somewhat ominous warning - that "staff of members of the House and members themselves be knowledgeable with respect to the Conflict of Interest Act and where appropriate or where in doubt on the expenditure of public funds by way of constituency allocation, they would seek the advise (sic) of the clerk or the Speaker."

But most importantly, the IEC invited the auditor general back in to look at the books of the House and its officers. That action followed through on Williams' 2002 promise.

Subsequent meetings would also result in action.

On April 14, the IEC revoked its 2000 directive neutering the comptroller general, and directed that all claims again go to that office for testing.

It also ordered an end to the practice of MHAs carrying forward claims from one fiscal year to the next.

But this welcome infusion of accountability came to a screeching halt on May 12, when the IEC agreed to pay MHAs a now-infamous $2,875 constituency bonus.

Forty-six of the 48 took the tax-free, receipt-free payment - all except Williams and Elizabeth Marshall, now a Tory MHA. The decision was worded vaguely to hide public disclosure; the payment was only unearthed years later by the AG.

And, as 2004 ebbed into 2005, the auditor general's findings would begin to take centre stage.


In January 2005, Auditor General John Noseworthy issued reports critical of spending by child and youth advocate Lloyd Wicks and citizens' representative Fraser March.

Both were independent officers of the House; both were previously exempt from review by the auditor general.

Wicks stepped down in the wake of findings that questioned personal travel he charged to taxpayers.

The legislature voted to fire March over his own travel claims and consulting work he performed while holding the ombudsman's position.

But if those were grenades dropped on the credibility of the House, the warheads were soon to follow.

In June 2006, Noseworthy began issuing his series of reports on House spending.

The tally, to date:
  • five current or former MHAs from all three parties allegedly overspent their constituency funds by a total of $1.6 million, beginning in 1997. Ed Byrne, Wally Andersen, Randy Collins, Jim Walsh and Percy Barrett are all under police investigation.
  • the House made questionable payments of an additional $2.8 million to a number of companies for trinkets and baubles like keychains and fridge magnets. A key House employee was tied to one of the firms. The AG questioned whether all of the baubles even existed. The Royal Newfoundland Constabulary is also investigating these findings.
  • two more MHAs double-billed their constituency funds by about $3,700 each. Transportation Minister John Hickey has since been cleared by police of criminal wrongdoing. The claims of former Tory MHA Kathy Goudie remain under review. Both MHAs repaid the money.
  • three MHAs touched by the probe have since quit provincial politics; two cabinet ministers stepped down, although Hickey has since been reinstated to his post.
The first phase of the auditor general's review is over. No other MHA overspent their allowance between 1990 and the present, Noseworthy says. Auditors found a "significant spike" in overspending after the decision to bar them in 2000.

The second - and potentially more interesting - phase is not yet complete.

Noseworthy is now examining what MHAs spent their constituency cash on, within those approved limits.

Auditors are poring over 17,000 claims from 122 MHAs over the past 17 years.

The AG's first report - examining sitting MHAs - is scheduled for release a month or two before the October provincial election. Noseworthy hopes to have the remainder of the work wrapped up by early 2008.

The auditor general could find that all MHAs were faithful servants of the public, only spending tax dollars on legitimate items to benefit their constituents.

Then again, he might not.


Danny Williams has become increasingly irritable about the mushrooming spending scandal, and the impact it is having on his government.

"Anyone got a longer rope? Because I'm getting to the end of mine," the premier said to reporters before a recent media briefing.

Williams has - quite rightly - claimed that transparency returned to House spending under his watch. He asked Chief Justice Derek Green to review MHA remuneration in the wake of the first AG report on constituency spending. He has committed to rewrite the laws that still, to this day, permit the IEC to eject auditors.

But members of his party, caucus and government were among those who went along with the changes that eroded accountability to the point of non-existence over the years. Thirty-two members of his caucus, for example, took the secret constituency bonus in 2004.

No MHA voluntarily released details of their constituency spending when asked to do so by The Telegram last summer. The Speaker advised them not to, fearing the information could become part of a widening police probe - hardly the most reassuring answer on how politicians are spending public money.

All three parties are now scrambling to sound the drumbeats of transparency. They all want future IEC meetings thrown open to the public. They want everyone to know they will follow the rules, whatever those rules may be.

But they also appear tone-deaf at times to public sentiment. Some MHAs are perplexed at why the secret $2,875 bonus is such a big deal - even though it came days after the legislature forced public-sector workers back on the job with wage freezes and concessions.

They have blamed the system for failing them. But the politicians are the ones who created the system, and for that, they have only themselves to blame.

That system lacked accountability, openness and transparency. The results are in black and white, in auditor general's reports that have broad-sided the province's political establishment.

Chief Justice Green will soon make recommendations on how things should be done in the future.

To appreciate why those changes are necessary, it's important to remember how they were done in the past.


More secret payments in IEC minutes
By Rob Antle

Members of the legislature's Internal Economy Commission voted to give all MHAs at least one other lump-sum payment, similar to the controversial 2004 bonus unearthed by the auditor general.

On Oct. 22, 1997, the IEC decided to hand over $1,500 to all MHAs. The cash was "in order to recognize additional expenses which will be incurred by members who will be canvassing their constituents regarding the Calgary Declaration."

The Calgary Declaration was one in a series of attempts by premiers to assuage constitutional concerns.

It followed the failure of the Meech Lake and Charlottetown accords - the most high-profile attempts to resolve the national unity impasse.

A month before the IEC agreed to the $1,500 payment, then-premier Brian Tobin told reporters that MHAs would consult with their constituents for opinions on the Calgary Declaration.

"It's important we reach out to all Newfoundlanders and Labradorians," Tobin said at the time.

In addition to the 1997 Calgary Declaration payment, there is also evidence that the IEC routinely bumped constituency benefits for MHAs retroactively, at the end of fiscal years.

Auditor General John Noseworthy found in a recent report that vague language hid a tax-free, receipt-free $2,875 constituency bonus made available to MHAs in 2004. Forty-six of the 48 MHAs took it.

There are several examples in IEC records of apparent constituency bumps near the end of the government's fiscal year (which runs to March 31):
  • on March 22, 2000, the commission jacked up constituency allotments for certain districts for the just-ending fiscal year, and the following year.
  • a March 6, 2002, IEC minute notes: "The commission directed the clerk to adjust the members' constituency allowances for the 2001-02 fiscal year in accordance with a proposal on file with the clerk." There are no further details on what that means.
  • a Feb. 26, 2003 minute says: "The commission by order approved additional allocations to members' constituency allowances for the 2002-03 fiscal year." Again, there is no more specific information on the "additional allocations."

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