‘Unprecedented’ trio of investigations uncover conflicts of interest, gross mismanagement of public funds and oversight failures at AER

Three investigations into the Alberta Energy Regulator (AER) found “gross mismanagement and waste of public funds” by Jim Ellis, the agency’s former CEO, that left taxpayers on the hook for $2.3 million.
 
Alberta Ethics Commissioner Marguerite Trussler, Public Interest Commissioner Marianne Ryan and Auditor General Doug Wylie held a joint news conference Friday to release damning findings from their respective offices.
 
At the centre of the allegations was the AER’s relationship with the now-defunct non-profit International Centre of Regulatory Excellence (ICORE), which AER established in 2017 as an independent entity to offer training to international energy regulators.
 
Each watchdog received complaints from whistleblowers in 2018 about the conduct of Ellis and other executives and board members of ICORE, which Trussler found was primarily being used to advance their future career prospects.
 
Trussler also found that Ellis violated the Conflict of Interests Act through ICORE activities “in that he furthered his own interest and improperly furthered the private interest of three other employees.”
 
Meanwhile, the auditor general and the public interest commissioner both found that establishing ICORE as a separate external entity fell outside the AER’s mandate, and that taxpayer money was inappropriately spent on ICORE.
 
In his audit, Wylie estimated that ICORE activities cost the AER $5.4 million and, with $3.1 million recouped, that the regulator lost $2.3 million.
 
Ryan, however, said there was no evidence to support the idea Ellis benefited financially from ICORE’s activities, and ruled out referring the matter to the solicitor general for potential criminal charges.
 
The investigations determined Ellis was using ICORE so he and other employees of the AER could score contract work or employment once their jobs with the regulator were over, despite legal advice warning it would be a conflict of interest.
 
The reports show the province’s energy regulator allowed what the public interest commissioner called a “reckless and wilful disregard” of cash and resources.
 
Wylie told reporters the “culture of fear” he saw evidence of during his investigation was “unexpected.”
 
Trussler said she was struck by how “blatant” the behaviour was.

The investigation was hampered by a lack of proper financial reporting and by the fact that the AER and ICORE’s business was conducted on since-deleted ICORE email addresses and through text messages.
 
The investigation required technology to recover deleted emails and texts.
 
Investigators also found whistleblowers had tried to express concerns internally before bringing them forward to a public investigation. Interviews and text messages showed an attempt to track down the whistleblower, who Ryan said, remains anonymous.
 
This is the first time three independent officers of the Legislative Assembly of Alberta have conducted investigations stemming from whistleblower complaints and public complaints.
 
If Ellis was still employed, Ryan said she would have recommended his resignation.
 
Former energy minister spoke directly with CEO, not board
Former NDP energy minister Marg McCuaig Boyd also failed to provide proper oversight of the AER, according to the auditor general, who said Boyd met regularly with Ellis rather than the board and its former chair.
 
While McCuaig-Boyd said she did not want ICORE to be a provincial corporation, and said she didn’t want industry levies collected on behalf of the AER to be used for ICORE, she never confirmed those things did not happen.
 
The former energy minister told the auditor general she had concerns over the board’s lack of expertise, and the AG’s report shows ICORE withheld important information from the minister.
 
The board, which is supposed to have eight members, often operated with only five and at one point in 2016 was down to three members.
 
UCP government reaction
“Public servants are beholden to the taxpayers they serve, and we cannot condemn the practices noted in these reports strongly enough,” said Energy Minister Sonya Savage and Environment and Parks Minister Jason Nixon, in a joint statement released Friday.
 
The UCP government fulfilled a campaign commitment by scrapping the AER’s board and appointing an interim board in September, and launched an investigation, which is still ongoing.
 
Alberta Energy Regulator reaction
The AER, in a statement, acknowledged “regrettable actions” by its former leadership.
 
“While ICORE was originally established to provide training to AER employees and support information sharing across jurisdictions, it is clear now that a small group of senior leaders used AER resources in a way that is unacceptable,” the regulator said. “These individuals are no longer employed at the AER.”
 
The public interest commissioner is continuing her investigation.