ASC Hobbled, Edmonton Journal

Fixing the hobbled ASC should be a priority:Alberta's powerhouse economy deserves first-class watchdogEdmontonJournal Saturday, June 4, 2005 Page: F1 / FRONT Section: BusinessByline: Gary Lamphier Column: Gary Lamphier Source:

The Edmonton JournalIf the Alberta Securities Commission was a publicly traded company, theevents of the past six months would have been crippling. In alllikelihood, the ASC's share price would have tanked, its shareholderswould be in open revolt, lawsuits would be flying, senior execs would bejumping ship (as indeed some are), and company directors would benervously checking their liability insurance. An independent committeeof the board would likely have been struck to explore the damagingallegations against senior management, contained in a report presentedto the ASC board in February. In the brave new world of corporategovernance, this is called transparency and accountability. But the ASCisn't a public company. It's an arm of the Alberta government. And as such, it is neither transparent or accountable, in any meaningful way.It is, in fact, subject to all of the usual meddling and politicalsubterfuge that afflicts any government body, especially in a one-partystate like Alberta. Most of the time, this wouldn't matter much to manypeople. Most are simply too busy making a living to care much about thearcane goings-on at the provincial securities regulator. Besides,compared to the stench exposed daily by the Gomery Commission, thesleazy vote-buying antics of the federal Liberals, or the possibility ofsex-killer Karla Homolka moving into your neighbourhood next month, theongoing soap opera at the ASC might seem more cartoonish thancataclysmic. After all, Alberta's economy is on wheels, the oil and gassector is booming, everyone is making money, and business is good. Sowhat if some disgruntled ASC staffers claim former chairman StephenSibold and exec director David Linder ran the ASC like a private club (aclaim they deny)? And so what if the ASC was seen by 10, 20, or 30staffers (sorry, I've lostcount) as a bastion of favouritism, bullying, intimidation, sexistjokes, and lax enforcement practices? What's the big deal, you mightask. Even if (as some say) relations between staff and ASC bosses remainpoisonous under interim chairman Peter Valentine -- an ex-provincialauditor who was brought in when Sibold's five-year term ended in May --you might see this as much ado about nothing. Every company has unhappyemployees, you may say. The kind of rapid staff turnover we're seeing atthe ASC -- where four executive positions are now vacant, including thatof former legal services director Patty Johnston, who left Tuesday -- ishardly unique. So what if a few people get fired, a few self-styledwhistleblowers get exposed, and the remaining staff learn to shut up andtoe the line, you may ask. You might even agree when Alberta FinanceMinister Shirley McClellan, who oversees the ASC, calls this strictly aninternal matter. Well, I'm afraid I don't. There are big issues at playhere. Alberta is an economic powerhouse, with world-class companies thatcompete for international capital. We can't afford a securitiesregulator that's so badly impaired by internal strife that it can't doits job. This isn't merely a messy in-house personnel spat between ASCstaffers and management -- a dispute that was first uncovered byFinancial Post reporter Theresa Tedesco in March -- it's also areflection of Alberta's parochial view of how to regulate the capitalmarkets. Like many other provinces, Alberta has long opposed thecreation of a national securities regulator. Forget the fact that theASC, like other provincial regulators, has far fewer enforcement staff,per capita, on its payroll than the U.S. Securities and ExchangeCommission. Or that scams like Bre-X and YBM Magnex were born right herein Alberta. For the provincial government, any talk of a nationalregulator is a non-starter. "Maybe a national securities commissionwould be ineffective too," says Toronto forensic accountant Al Rosen, avocal critic of the current regime of provincial regulators. "But Ican't imagine it being worse than what we have now. I think in general,investors should be very concerned." Amen to that, Al.