The Atcon Ryan Report or “I can barely hear you, Mr. Levesque.”
The Atcon controversy in New Brunswick stemmed from accusations that former Premier Shawn Graham and his Cabinet had used the power of office to influence decisions that resulted in the use of taxpayer dollars to prop up the Atcon Group, a construction company located in the Miramichi area. The taxpayer support came in the form of loan guarantees amounting to $50 million to the company in 2009, but by 2014 the province had lost $69 million from its ‘investments’ in the business (which went bankrupt in March 2010). The accusations of conflict-of-interest lead to an investigation that began in 2010 by Office of the Conflict of Interest Commissioner Patrick Ryan, and resulted in the Ryan Report in 2012. It was not until 2017 that the Auditor-General for New Brunswick completed her review of how the money was spent. She concluded that the company was so badly managed that the provincial loan guarantees could not have saved the company. Although civil servants had warned that such loan guarantees for Atcon were very risky, they did not, said the AG, clearly tell Cabinet that the company was doomed. However, the Commissioner’s Report does show that the civil service did initially recommend that the request for loan guarantees be rejected.
There are at least two different issues here: the conflict of interest (Shawn Graham knew or should have known that his father had an association with Atcon) and the soundness of the decision to provide a loan guarantee to Atcon. The latter was made against the advice of several senior civil servants, although it seems that a Deputy Minister (the civil service head of Business NB) over-rode those concerns. While you can argue that the government may from time to time offer such guarantees or loans, here the risk to the taxpayer was unusually high. In such circumstances there should be an obligation of the elected members of the government and civil servants to be transparent and raise the risk issue in a public manner.
Here are some relevant extracts from the Report (converted from the pdf):
 The matter of the complaint concerns the alleged participation of Premier Graham in the granting by the province of multi-million dollar loan guarantees in 2008 and 2009 in favour of a number of related companies known as the Atcon Group while the Premier’s father was a director and consultant to one or more of the related Atcon companies, notably as a director of a company in Sweden called Vänerply AB and a paid consultant to Atcon companies. The principal shareholder and operating mind of all the Atcon related companies is Robert W. Tozer, then a major construction contractor of Miramichi, New Brunswick.
 In 2008 the Atcon Group received a loan guarantee for $13,362,845. In 2009 an application by the Atcon Group for $50,000,000 financial assistance was consistently rejected at various levels by Business New Brunswick but approved and granted by the Executive Council while the fortunes of Atcon were rapidly deteriorating despite massive financial assistance from the province, ending in the bankruptcy of the Atcon companies.
THE FINANCIAL ASSISTANCE
 The Atcon companies and Robert Tozer were not strangers to Business New Brunswick. His companies had come knocking on the provincial government door with abundant success many times over the years. He was politically colour blind in his unabashed demands for financial assistance from a succession of governments.
 The evidence shows a history of considerable financial assistance from government as the Atcon companies grew in importance to the local and regional economy, to the strength of the payrolls, and to an increase in the full-time and part-time employment numbers.
 In 2007 Atcon Holdings Inc. claimed to have a payroll of $76 million; in 2008, $80 million. By 2009 there were 16 Atcon related companies. The financial structures of the companies collapsed, brought about, among other things, by the inability to meet the burden of an absence of capital. The principal banker at the time of the break down, the Bank of Nova Scotia, was fully secured by Atcon assets and the Province of New Brunswick’s multi-million dollar guarantees.
 An extremely large request for assistance by way of guarantees came before Business New Brunswick and the Executive Council from the Atcon Group of companies. The key corporation in the Atcon Group was a construction company from the Miramichi region. Normally, Business New Brunswick did “not assist with construction contract financing or performance bonding.” (Exhibit 118 Privileged) Here, it did.
 The Premier’s father, Alan R. Graham, was a director of one of the Atcon related companies, Vänerply AB, and had been a director for many years. He may also have been a shareholder of OPI AB a company that owned Vänerply AB. Alan Graham was also a paid consultant on retainer with Atcon. All of the Atcon Group of companies were controlled by one man, Robert William Tozer.
 In the spring of 2010 Claude Williams, then a member of the opposition, requested an investigation into the matter of the financial assistance being given to the Acton Group. He alleged that in participating in the Executive Council guarantees the Premier, as President of the Executive Council, was in conflict by furthering the financial and business interests of his father.
In his Report, Commissioner Ryan concluded that then-Premier Graham knew or should have known that he was in a conflict of interest. A few years later, the Auditor General for New Brunswick determined that Atcon was in such poor financial shape that the use of government funds (some $63 million dollars lost) in an attempt to bail out the business was ill-advised. So, a bad loan and a conflict of interest. Graham and his supporters argued that the loan was made in good faith to protect jobs in an economically depressed region. Perhaps. But it is clear that the civil service must have been pressured to push the loan through. The testimony of a clearly reticent and embarrassed Deputy Minister of Business NB (Bill Levesque) makes that clear:
 Mr. Levesque had come to his position as Deputy Minister in the fall of 2009. This was after the money had been approved and Atcon was descending into deeper financial trouble. Prior to his appointment on October 5, 2009, he served as a member of the New Brunswick Industrial Development Board (NBIDB) at its monthly meetings and was familiar with Atcon’s requests for financial aid, particularly the $50 million in guarantees ($10 million-fabrication plant, $20 million to retire a high interest loan and $20 million for working capital). In fact the New Brunswick Industrial Development Board rejected the Atcon application on March 16 and sent a negative recommendation to the Cabinet shortly before the Cabinet approved the guarantees on March 26, 2009.
 The evidence shows that the diligent employees of Business New Brunswick were hampered in every way in trying to get current information from Atcon. It was particularly frustrating. Business New Brunswick instead of getting audited statements from Atcon, were told that they could travel to Miramichi and look at the books. They did. The situation was so ridiculous that there was not even a proper application for the guarantees by Atcon. A financial application was cobbled together by a Business New Brunswick financial officer, John Watt, since retired. He was so familiar with Atcon over the years that he could do this so that there existed at least the semblance of a record for action. Mr. Watt’s consistent, if not persistent, recommendation was contra the guarantees.
 When I requested that Deputy Minister Levesque provide me with the details of how Business New Brunswick followed the detailed procedure that he had supplied to me, the information supply from him faltered, then all but dried up. When I asked to inspect certain documents I received correspondence from counsel in the Office of the Attorney General that the documents would not be given to me for my inspection. I took exception to this refusal and saw that the only way I would be able to view the documents and circumvent this obstruction would be through the power of an inquiry. Consequently, I turned the process into an investigation and inquiry. Deputy Minister Levesque was joined by Deputy Minister Byron James, Clerk of the Executive Council, in refusing to produce the documents for my inspection, documents of every nature and kind that went to the Executive Council. I needed to inspect the documents in order to determine what participation the Premier had in the decision making process as it related to Alan Graham. My demands to inspect the documents were vigorously defended by way of argument and the filing of briefs.
[from the Report – testimony of Deputy Minister Bill Levesque]
Q. Now, again, on December the 7th you were under oath, and you were under oath to tell the whole truth. Why did you not disclose in this testimony that the guarantee had been paid?
A. Well, again, the information…my reasoning for this is the information was not public information at that point, sir. You’ve asked me two questions. This one I don’t remember. Under oath, from my knowledge and what I know and I understand is I cannot divulge information that is not public here as an OIC, an Order-in-Council. Obviously, when…Not obviously when we… the OIC was developed, we had discussions with our…with [our] lawyer, with our team on explaining the, the documents…
Q. I can barely hear you, Mr. Levesque.
A. Well, well I…At that point on November 1st it was expired. I… Once the agreement and the OIC is not public, for my sake as Deputy Minister, I, I…we don’t divulge the information. It’s confidentiality of Cabinet at that point, so I kept on that…on that principle.
THE COMMISSIONER: Why didn’t you give us an explanation for…that explanation which you’re giving now, that you were not able to divulge because there was something…a matter before Cabinet or whatever? Why, why wouldn’t you give us that information?
A. Well, sir, I remember my…our team…I remember Mr. Logan standing up at that point stating that we had an issue but I, I did not, sir. I did not because of confidentiality of, of the Order-in- Council, confidentiality of the decision of Cabinet at that point.
Q. But as, as the Commissioner has asked you, could you not have given an explanation and said, “Look that’s a very good question. I can’t divulge it right now because the matter’s before the Cabinet, but we will give you an answer in due course.”
MR. LOGAN: I don’t have…
THE COMMISSIONER: Sit, sit down, sit down, Mr. Logan.
Q. Could you have said that?
A. I could’ve said that, yes. I could have said that, Mr. Faloon, yes.
THE COMMISSIONER: Well, that would’ve been the whole truth.
A. I could have said that, yes.
 After 56 years as a litigator, lecturer, trial justice, appeal court justice and conflict of interest commissioner my experience is that the deputy minister, in so testifying, did not feel any sense of wrong doing, having persuaded himself that he was doing it in a good cause. He was wrong.
In my opinion, it is clear from the text that the various rules established to protect the interests of the public were either insufficient to protect the public interest or were violated by both elected members of the legislature and senior civil servants. Furthermore, advice from senior civil servants was rejected by Cabinet members. It certainly appears that the Premier and the Cabinet pressured Mr Levesque to do a run-around of his colleagues’ advice and push the loan through despite the misgivings of those colleagues. They may have felt that the circumstances (threat of jobs lost in an economically depressed region) warranted such action, but they were wrong. It seems to me that we need a requirement that such rejections be documented in a more public manner. If politicians feel the need to go against the best advice received, then they need to justify that action to the public before proceeding. It certainly might be possible that the civil service gets things wrong, even when they attempt to make best use of available information. If Cabinet feels that the advice is wrong, then they should say so publicly, not pressure behind closed doors a senior civil servant to ‘get ‘er done’. This is another example of the low level of transparency we have in this province. From the Commissioner’s report :” There is no code of conduct to guide the Members of the New Brunswick Legislative Assembly in either the broad or intricate dealings that the members conduct on behalf of the public.” There should be.
So, no code of conduct for the MLAs and apparently only weak protections for senior civil servants who find their advice rejected. Hopefully, the anger at Shawn Graham and the Liberals will be translated into some improvements in the way things are done in NB. Unfortunately, the Conservatives have their own skeletons in the closet and may need to be pushed into bringing forward some legislative improvements before the next election. Perhaps the NDP and /or Green Party could present some draft legislation to those ends. The Liberals will need to make a dramatic break with the past if they want to get back in the good graces of the voting public – their own draft legislation to address the issue would be a start.