Assemblée législative de l'Ontario

WORKERS' COMPENSATION BOARD

SUBCOMMITTEE REPORT

CONTENTS

Wednesday 17 November 1993

Workers' Compensation Board

Odoardo Di Santo, chair

Brian King, vice-chair, administration

Subcommittee report

STANDING COMMITTEE ON GOVERNMENT AGENCIES

*Chair / Présidente: Marland, Margaret (Mississauga South/-Sud PC)

*Vice-Chair / Vice-Président: McLean, Allan K. (Simcoe East/-Est PC)

Bradley, James J. (St Catharines L)

*Carter, Jenny (Peterborough ND)

*Cleary, John C. (Cornwall L)

Curling, Alvin (Scarborough North/-Nord L)

*Frankford, Robert (Scarborough East/-Est ND)

*Harrington, Margaret H. (Niagara Falls ND)

Mammoliti, George (Yorkview ND)

*Marchese, Rosario (Fort York ND)

*Waters, Daniel (Muskoka-Georgian Bay/Muskoka-Baie-Georgienne ND)

*Witmer, Elizabeth (Waterloo North/-Nord PC)

*In attendance / présents

Substitutions present/ Membres remplaçants présents:

Cooper, Mike (Kitchener-Wilmot ND) for Mr Mammoliti

Mahoney, Steven W. (Mississauga West/-Ouest L) for Mr Bradley

Also taking part / Autres participants et participantes:

Bradley, James J. (St Catharines L)

Clerk pro tem / Greffier par intérim: Arnott, Doug

Staff / Personnel: Yeager, Lewis, research officer, Legislative Research Service

The committee met at 1018 in room 228.

WORKERS' COMPENSATION BOARD

The Chair (Mrs Margaret Marland): Good morning. I'd like to call to order this meeting of the standing committee on government agencies. This morning we have the continuation of a review of the operations of the Workers' Compensation Board. We would like to welcome Mr Odoardo Di Santo, the chair of the board, and Mr Brian King, the vice-chair of administration.

You are here as a result of an invitation by the committee to appear before the committee as a result of an exchange of correspondence between Mr King and the Provincial Auditor, Mr Erik Peters.

Mr Brian King: Good morning, members of the committee. I am here today to answer questions that you may have surrounding my testimony to this committee that occurred in September of this year.

I have in the last few weeks reviewed the transcripts of that testimony. I reflected upon my own words to the members of this committee. I have read very carefully Mr Peters's letter of October 21, 1993, to the Chair of this committee. It's clear to me that certain parts of my testimony created misunderstandings that I did not intend.

To ensure that the Provincial Auditor was not offended by my words, Mr Peters and I were in contact and I apologized for any misunderstandings which arose as a consequence of my presentation to this committee. I believe you have copies of my letter. In his correspondence of October 27, 1993, to the Chair, Mr Peters accepted my apology.

For the members of this committee, let me be clear that in my testimony I did not mean to imply that the Office of the Provincial Auditor acted in anything other than an impartial manner. I'm concerned that my comments over the course of three and a half days may have led some people, including this committee, to think otherwise.

In my many contacts with Mr Peters I've received valuable advice and constructive criticism. These discussions have always occurred in a frank and cordial manner. Let me emphasize that we agree with the recommendations contained in the auditor's report, the special audit on the facility that the WCB is involved with.

We're providing, for example, a report to the minister and to the cabinet on the economic justification for the construction of Simcoe Place, which was one of the recommendations in the report. We've reviewed our conflict-of-interest policy to address concerns brought forward in the auditor's report. We also adopted the recommendation designed to remedy the finding that the spirit of section 64 of the Workers' Compensation Act had been breached. This was all reported in the initial report of the Provincial Auditor, that we were in full agreement to comply with the recommendations.

The Workers' Compensation Board and the Ministry of Labour have been working to improve the accountability framework within which the WCB operates. A final draft of a new memorandum of understanding has been prepared, and the Deputy Minister of Labour and I have arranged to meet with Mr Peters -- I believe the meeting time is November 24, 1993 -- to discuss our progress in implementing the auditor's recommendations, including the draft of a new memorandum of understanding.

I would agree with the Provincial Auditor that our time should now be spent on focusing on the important issues surrounding the accountability framework. In the meantime, I am here to answer any questions members of this committee might have.

The Chair: Thank you, Mr King. Is it the committee's wish that we rotate with time allotments, and do you wish to do 10-, 15-, or 20-minute time allotments?

Mr Steven W. Mahoney (Mississauga West): Whatever your pleasure is, Madam Chair. I would think we should rotate, 15 minutes.

The Chair: Fifteen minutes. Fine. Then we'll start with the official opposition. We don't have the stopwatch this morning, but we'll try to be accurate.

Mr Mahoney: Do you want one?

The Chair: No. I have a watch, but not the stopwatch we usually use.

Mr Mahoney: Thank you, Mr King, for your opening remarks, and thank you and Mr Di Santo for coming here this morning. The reason the committee asked you to come is not really addressed in your opening remarks, and I'd just like to focus on that.

You can appreciate that when we're in hearings, the import or the impact of statements that are made by witnesses might not sink in directly to the committee clearly as much as it would do to someone such as the auditor or any other agency or board which might then read them subsequently in Hansard. I recall questioning you about your statement. I think you said something to the effect -- and I don't want to put words in your mouth, but you used the word "rhetoric" in reference to the Provincial Auditor's report.

Others asked, but I recall asking you personally, if you considered the Provincial Auditor's report to be rhetoric. I don't want to flog a horse. I know that, in your mind, you think you have issued an apology that has been accepted by Mr Peters. My difficulty, to be very straightforward with you, is that what you've apologized for in your letter is "any misunderstandings about the objectivity and factual content" of the report.

That's not my concern. If one of my colleagues misunderstands something you said, that's their problem; and if I misunderstand it, then hopefully I would get clarification. My concern is that I don't think this is about misunderstandings. I think this is about what you refer to as subjective opinions that the auditor might have had but are really subjective opinions that you, sir, had in relation to his report.

Had you clearly apologized for saying what you said, specifically in relationship to the Hansard quotes on page A-234, where you were asked again if you considered the auditor's report to be rhetoric -- you've given your subjective opinion, with due respect, about what the Provincial Auditor's role is. I think he took exception to that, and in hindsight I take exception to that, because I think the Provincial Auditor literally has to be more or less above all of us and looking down at the activities that take place, whether it be in Parliament or whether it be in an agency of some type.

For you, then, to come out and say that you don't find it to be a normal audit, that if he finds someone in breach of the law, you find that to be subjective -- you've gone on. In a number of instances you refer to the legal opinions. There are very much contrary statements here; as an example, where you say, "As a matter of fact, I tried to get Erik Peters, the Provincial Auditor, to show me his legal opinions, but he wouldn't."

The auditor goes on to say:

"Mr King's allegation that he tried to get me...to show him my legal opinion, but I wouldn't, is not factually correct. If he had contacted me directly, which he did not, I would have advised him that under the Audit Act, according to legal advice, I am precluded from providing the legal opinion because it forms part of the audit working papers."

He is precluded from providing them to me as a legislator and he's certainly precluded from providing them to you.

In the hearing, there were calls for your head on a platter. I don't want that. What I want is a very clear statement that what you said was factually incorrect and that you apologize to the committee and to Mr Peters for saying that. Someone suggested that we wanted you to grovel. I don't want that at all. You are a professional, and I expect you would continue to conduct yourself, as you have in most cases, in a professional way. But I don't see an apology for misunderstandings being, quite frankly, an abject apology for saying something that's factually incorrect. There are a number of examples, and I won't go through them all.

Mr King: Let me first begin by indicating that on page A-235 of the Hansard that I have in front of me, I will quote my remark, "I did not call the Provincial Auditor's report rhetoric." So I did not call the Provincial Auditor's report rhetoric.

Mr Mahoney: Are you quoting there? I'm sorry.

Mr King: I'm quoting from Hansard, on what I understand to be page A-235, "Mr King: I did not call the Provincial Auditor's report rhetoric." I'm not too sure which copy of Hansard I've got, but clearly my response to the question of rhetoric was, no, I did not call it rhetoric.

Secondly, I did not want to leave any impression whatsoever that the Office of the Provincial Auditor acted in anything other than an impartial manner. My intention in speaking the word "subjective" was to underline the conclusion of the Provincial Auditor's report that it was the spirit of section 64 that he found us to be in breach of and that there was no illegality.

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Clearly, in Ontario as well as in other jurisdictions, there's an expectation for a Provincial Auditor to be candid and forthright when investigating in government ministries and agencies. In my eagerness to, I suppose, point out that we hadn't been found to have conducted ourselves in an illegal manner, I made a comment that has been misconstrued as casting doubt on the objectivity of the Office of the Provincial Auditor. I have apologized for that misunderstanding to the Provincial Auditor with no questions asked. I apologized to Mr Peters both personally and in writing.

When I suggested in my testimony to this committee in September that this was not a normal audit report, I was basing it upon my experience, which is rather widespread, on what I understand normal audits to be; that is, operational audits that are conducted annually on agencies like the Workers' Compensation Board and other departments, not special audits. I've never been involved in a special audit and I did find it significantly different than the operational audits we're all subject to as managers in public agencies from year to year.

Clearly, I don't think Mr Peters's findings in the special audit were influenced in any way because the request for the report came from this committee. We unequivocally agreed to implement the recommendations and we agreed with the recommendations in the audit report and are working in partnership with Mr Peters and the Ministry of Labour on implementing the findings.

Mr Mahoney: The issue of it being a normal audit: Have you been involved in provincial audits before?

Mr King: I have been involved in the normal audit process on at least eight or nine occasions over the course of eight or nine years.

Mr Mahoney: Of a Provincial Auditor?

Mr King: Of a Provincial Auditor, yes.

Mr Mahoney: We all know the provincial audit that comes out on the government of the day, at which time they delve into shoes in the closet, literally, which in terms of an accounting audit would hardly be considered normal in the business of accounting where a large accounting firm comes in and analyses the books, so to speak. There are often comments made about a government of the day that some of its activities are inappropriate or the auditor finds something wasteful and this is not, clearly, the same as if you owned a company and your auditors came in to check your accounting procedures.

Why would it not be normal for a Provincial Auditor to comment on process in an agency in dealing with the building? Because clearly what he said is that he didn't agree with the process that was used in dealing with section 64 and the implication was that you could have, should have, sought cabinet approval for the building. Why is that not normal?

Mr King: During the course of a normal audit that I've been involved with for seven or eight times, you have almost the full year to debate and discuss issues surrounding whether or not you can be doing your job better as a manager of an agency or a manager of a government department.

You have the time to reflect upon how you can repair or amend the way you're managing. You have time to reflect whether you can agree with the findings of the audit because it may indeed come up against a service delivery objective. In other words, an audit may find that you're not secure with your computer system and you find that to get it secure you're going to have to shut it down and then you can't pay your cheques. You have a lot of time to consider.

In the special audit, we had time limitations and there was a conclusion time. We agree with the conclusions that he arrived at, however. We stated so in our written response included in the audit.

One other minor point you had raised earlier and I had forgotten to comment on was the question of the "wouldn't" or the "couldn't" in terms of the legal opinion. I happened to be, at the risk of not knowing how far away, let's call it over 1,000 kilometres away on holidays at the time the special audit was tabled, I believe, before the public accounts committee. It was the next day, I believe, that I read in the Globe and Mail national edition that there had been some information or some things happening about it. So I phoned back and I spoke to the person who was I guess acting as my proxy at the time and we briefed each other, or I got briefed, over the telephone.

The question of the Provincial Auditor's legal opinion did arise in that telephone briefing. I could not honestly tell you, Mr Mahoney, whether or not the individual who briefed me said Mr Peters said he "couldn't" or "wouldn't." That is something I simply couldn't recall based on a conversation that occurred in July. It was not a big deal. It was, "Did you ask for the legal opinion of the Provincial Auditor?" "Yes, but he said that he," and I honestly couldn't tell you whether it was a "wouldn't" or a "couldn't" that came out.

I did not know Mr Peters's position vis-à-vis section 19 of the act, wherein "audit working papers of the office of the auditor shall not be laid before the assembly or any committee of the assembly," until Mr Peters telephoned me approximately September 27 to give me the reasons why he didn't release it, and at that point I realized that my answer to this committee should have been "couldn't."

Mr Mahoney: We could probably cut this reasonably short if you're prepared to answer this question: Your statement, both in your letter and again this morning, is that you apologize for any misunderstanding. That's almost like saying you're sorry that everybody misunderstood you. Are you sorry you said what you said and are you prepared to apologize to Mr Peters and this committee for having said those things?

Mr King: I have already apologized to Mr Peters for the misunderstandings that my inability to communicate led to. I was misunderstood. There was no intention on my part to mislead either this committee or Mr Peters.

Mr Mahoney: I understand that you've said that. When we say something in the Legislature that the Speaker is not happy with, the Speaker stands up and says, "Would the member withdraw those remarks," and very often we indeed do that. Even though it may not be required under parliamentary rules, we do it just in the spirit of fair play.

I guess I'm asking you, are you prepared to withdraw your remarks that were made with regard to the provincial audit and are referred to in the Hansard that has been presented by Mr Peters, and to apologize to Mr Peters and the committee for having said that? Not for what you think we understood or misunderstood; that's our problem. It's what you said, Mr King, that we're talking about. If you were a parliamentarian and I were the Speaker, my question would be, "Would the member withdraw?" Mr King, will you withdraw your remarks?

Mr King: I regret my remarks. I have already apologized to Mr Peters for any misunderstandings that my remarks led to. None of my remarks were misleading or intended to mislead the members of the committee. That may seem like a fine distinction to you, but I'm a public servant and I cannot and will not ever mislead a public committee like a cabinet committee like this.

I suppose from the outset of this process, beginning probably back in January, we've been faced with what I will call reported factual errors. One that I kept seeing reported was that it's $380 a square foot. One tends to get tired of explaining, "No, it's not $380 a square foot," so perhaps I have overreacted and become too defensive to some of that information that is reported in the media.

Mr Mahoney: In fairness, we have to do that every day in our jobs.

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Mrs Elizabeth Witmer (Waterloo North): You've indicated, Mr King, that your intention was not to mislead the committee, and yet it's abundantly clear that when you appeared before the committee, you did mislead this committee on at least three points when the information was reviewed by the auditor.

The first point was the fact that you had indicated that the auditor departed from the standard practices by providing subjective opinions, which of course he had not; that you had asked the auditor for legal opinions, again, which was not done; and finally, that a holding company involved in the property had been audited by the Office of the Provincial Auditor, and it had not.

So I guess my question to you is, how do you reconcile the fact that you're saying you did not intend to mislead the committee when it was pointed out by the Provincial Auditor that on three occasions within the presentation that you made, you did indeed do so and you are in conflict with the auditor?

Mr King: I again categorically deny that I misled this committee. You've raised three points. One of them is the question of "subjective." I have covered that both in my opening statement and in response to a question from Mr Mahoney. Let me repeat myself: I did not mean to imply in any of my remarks that the Office of the Provincial Auditor acted in anything other than an impartial manner.

I used the term "subjective." My intention there was to indicate probably relief that we weren't found to have conducted ourselves illegally but that we were in breach of spirit. I want to repeat once again that we have openly agreed to every recommendation contained in the Provincial Auditor's report and to follow them.

I have again tried to address the second question, which is the question of legal opinions. A proxy of mine asked for a copy of the legal opinion. If I'm found to have misled this committee because I used the word "I" asked for a legal opinion instead of "my agent" asked for it, then I don't know where I can go with that. But indeed, through myself, an agent asked for the legal opinion. I've explained that on the telephone while I was on vacation, I was told that we -- and I don't remember whether it was "would not" or "could not." I did not intentionally -- it was not until September 27 that Mr Peters explained section 19 of the act to me.

I may be guilty of failure to have checked into the law on that matter, but I was testifying for three and a half days in front of this committee and I suppose there were 10,000 words of testimony.

Finally, with respect to the holding company, in 1985, Management Board of Cabinet passed a directive which said that agencies should seek Management Board approval before they incorporate subsidiaries to do things that they cannot do. In 1988, that numbered company, 799, was incorporated to invest in real estate in accordance with the Workers' Compensation Act and the Pension Benefits Act. If there were indeed a breach of a Management Board directive, presumably that breach occurred in 1988, when the numbered company was created to hold real estate.

We had been audited, our investment division, in 1990. Simcoe Place was not part of the holdings of that numbered company at the time; there were other real estate holdings in 799.

I suppose we mistakenly assumed that because we had been audited and we had real estate transactions in the numbered company, we had received some verification of our ability to use it. We were wrong. Mr Peters pointed that out to us in his letter to the committee of October 21, I believe it was.

I indicated earlier that the board of directors is taking action to rectify the breach of section 6.2, I think it is, of the Management Board.

There was no intention to mislead this committee that Simcoe Place had been audited by the Provincial Auditor under the holding company. The holding company itself had been part of an overall audit, one presumes, of the investment branch of the WCB. We took mistaken comfort; we're admitting we made a mistake. The board is rectifying that by seeking approval for the numbered holding company through the normal process laid out in Management Board.

Mrs Witmer: In public accounts, Mr King -- let's go back to the legal opinions -- you had indicated that you had two or three legal opinions. How many did you share?

Mr King: The public accounts committee, which was, as I recall, in January of this year, was my first real appearance before any of the cabinet committees of Ontario. I didn't come with a big, thick binder with everything in it because I was unaware of process.

We began to answer questions at approximately 2 o'clock and ran straight through until after 6 o'clock. I happen to remember that because I was hoping to get a break for personal comfort reasons and we kept running right through. That was the first day.

During that first day, I indicated that we had two, possibly three, legal opinions and that I would be pleased to share those legal opinions with the members of the committee.

When we broke at 6:10 or 6:15 from the public accounts committee, I met with my staff. We met the next morning at 8 o'clock and said, "What can we have ready?" because the committee was called together at 10 o'clock the following morning.

You may recall we had three feet of legal documentation. There was one legal opinion; there may have been a real estate. Again, the committee met from about 10 o'clock till a quarter to 12 and then it voted to adjourn.

I was left with the following: I had promised material to that committee. We hadn't had time. There was simply an hour of working time between around 9 o'clock, 8:30, when our office opened, and when we had to leave for the hearing. I hadn't had time to supply all that information.

Some of my officials and I stayed behind to meet with the Provincial Auditor and his officials to say: "What do we do about this information the public accounts committee has asked for? Do I go back and get it and deliver it to them?"

I was informed -- there were four or five us; I could let you know who they were -- that we would receive advice as to what we should provide in addition to what we had already provided, and presumably that advice came when this committee sent Mr Peters in to do the special audit. He had access to all of the information, including the other legal reports that existed.

So you're right that I had promised on the first day of testimony that we would provide the committee with legal opinions. The second day I had not had time to get them or collect them yet and asked for advice. Mr Peters gave me that advice. Eventually those legal opinions came to the committee through his report, presumably, that he examined them.

I'll admit to personal distress at having read Hansard a week or so later and the term "liar" appeared, but I'm a public servant so I can't respond to those sorts of things.

Mrs Witmer: Then how many legal opinions did you personally share with the committee?

Mr King: On the second day of testimony at the public accounts committee in January I brought one of the legal opinions. The other one was not available to me in the short period of time. I had an order to get the material. I volunteered that report through the person of Mr Peters following the second day when the committee voted to end debate. I was concerned because I hadn't delivered everything I had promised, but I didn't have time.

Mrs Witmer: So who was providing you with the third legal opinion that you made reference to in the committee?

Mr King: There was a third legal opinion, which was an internal one done by our own legal branch. In addition, we have legal opinions from Aird and Berlis; Stikeman, Elliot; and ultimately from Weir and Foulds.

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Mrs Witmer: You've indicated that perhaps you overreacted that day, that you were overdefensive. You've indicated that you're a civil servant. Do you feel in any way that you are a political appointee to the position you hold?

Mr King: Of course I'm appointed through an order in council. That makes one, presumably, appointed by political process rather than through some sort of public search. But I'm not a political figure; in other words, I don't have a political agenda.

Mrs Witmer: Have you had an affiliation with the NDP in the past, Mr King?

Mr King: No, I have not.

Mrs Witmer: So you don't feel you were appointed for that reason.

Mr King: I didn't apply for the job of vice-chair of administration of the Ontario Workers' Compensation Board. A headhunting firm, to use the common parlance, was in touch with me, because there are a dozen of us in Canada who know an awful lot about workers' compensation, and I suspect the other 11 people were also contacted.

Mrs Witmer: You had worked for the NDP government in Manitoba?

Mr King: I had worked as the chairman of the Workers' Compensation Board in Manitoba.

Mrs Witmer: Under the NDP government?

Mr King: Yes, and under the Conservative government.

Mrs Witmer: Why did you leave when the Conservatives came to power? Why did you leave Manitoba?

Mr King: Before I moved to Manitoba, I ensured that I had a contract with the government that would allow both parties to end the relationship under contractual terms. I had a disagreement of opinion with a minister, and we agreed to leave.

Mrs Witmer: This was the Labour minister in Manitoba.

Mr King: That's correct. He exercised his right under the contract, which we discussed.

Mrs Witmer: That brings into question -- it's been asked many times and it's been discussed -- whether or not the position you find yourself in should be a political appointment or whether the organization should be run by a professional insurance executive.

Mr Daniel Waters (Muskoka-Georgian Bay): On a point of order, Mr Chair: It's my understanding that Mr King is here today -- and it was agreed upon at subcommittee and by committee -- to talk solely about the communication between himself and the auditor, and not about what he did in Manitoba or anywhere else in the world.

Mr Mahoney: Read the agenda.

The Vice-Chair (Mr Allan K. McLean): You're out of order, Mr Waters. Mrs Witmer, you may continue.

Mrs Witmer: Thank you, Mr Chair.

Mr King: There was a question?

Mrs Witmer: Yes, there was a question.

Mr King: I happen to have a personal belief that in order to try to get the accountabilities straight as to who the president or the vice-chair of administration works for, it probably should be the board of directors. Now, our board of directors has already recommended a governance model wherein my position would be hired by the board of directors.

I want to clarify something, though. I'm a professional. I don't get my jobs because of who I know; I get my jobs because I'm a professional. I will stack my career and the things I have done against anyone. I want to make that perfectly clear.

The Vice-Chair: You have four minutes left.

Mrs Witmer: There's a question I'm left with. You've indicated that you felt defensive. Obviously, you want to support the government on the WCB. You and I both know that the organization has come under increasing criticism from employers and injured workers throughout the province. In fact, that criticism is growing daily as the WCB is accused of mismanagement. Certainly today I heard of a perfect example of how we are mismanaging the system and wasting taxpayers' dollars. I'm wondering if, in any way, some of the comments you made were an attempt to show support for the organization and the government. That's why I'm wondering if we should have a very neutral insurance executive running this organization who has absolutely no link with any political party or any past history.

Mr King: The position of the vice-chair of administration is not to protect the government. The board of directors is the one that makes the decisions surrounding all of the important issues pertaining to workers' compensation. I believe it is my duty that when the board of directors has made a decision, I've got to be one who defends those decisions. It was the board of directors that made the decision to go ahead with a facilities strategy commonly referenced as Simcoe Place, and I believe it is my duty to defend that, but that has no bearing whatsoever to the government's position. That has more to do with the board of directors' position.

As to the neutrality or the professionalism, I happen to have supported the board of directors' recommendation that there be a different model of governance, where the vice-chair or the president is hired by the board of directors as a professional manager, never admitting that I'm anything but a professional manager.

The Vice-Chair: Thank you. We'll move on now to the government.

Ms Jenny Carter (Peterborough): I'd first like to remind the committee about the letter from the auditor, Mr Peters, to Mrs Marland, dated October 27, which says:

"I have received the letter of apology from Mr King of October 27, 1993, in which he states that my letter of October 21 has clarified the situation for your committee.

"In my opinion this would put this matter to rest and would enable all of us to carry on the important work of improving the accountability framework in which the Workers' Compensation Board operates.

"Sincerely,

"Erik Peters, CA, Provincial Auditor"

We should all be clear that there is no question at issue between Mr King and Mr Peters. That in fact was satisfactorily resolved some time ago.

The auditor did ask that the WCB's conflict-of-interest policy for its investments should be revised to address conflicts which may arise between the needs of WCB administration and the WCB's investment needs. In your statement, Mr King, you do say, "The WCB has reviewed its conflict-of-interest policy to address the concerns of the auditor." Could you tell us in a little more detail what those steps might be?

Mr King: Yes. We have an investment committee of the Workers' Compensation Board which sets the investment policy, the overall blanket policy for investing.

We are working on any conflict-of-interest guidelines that have to be struck which the members of that committee have to follow. Indeed, we have conflict-of-interest guidelines that we, as employees of the board of directors, have to follow, or as members of the administration have to follow. We try to craft and tailor our own behaviour on that which government expects of its employees. I believe the specifics of it were that there may have been the appearance that, being both a tenant and an investor, we may have been in a perceived or an actual conflict of interest in being both a tenant and an investor.

We are preparing a report, through the process of the investment committee, through the process of our board of directors, for the minister and for the cabinet. This report will include detailed recommendations as to how we're going to deal with the conflict of interest.

I've already indicated that the Deputy Minister of Labour and I have a meeting with Mr Peters, I believe it's November 24, to go over the work done thus far and to follow up on his concluding paragraph of the letter you quoted, which is, let's get on with the accountability framework he has suggested. We will begin discussing with the Provincial Auditor the needs, to meet his concerns about potential or actual conflict of interest, as early as the 24th, having done background work.

Ms Carter: The auditor also said that the memorandum of understanding should be updated, and you state, "A final draft of a new memorandum of understanding has been prepared." Could you also tell us a little more about that?

Mr King: The staff from both the Ministry of Labour and from the Workers' Compensation Board, including the Deputy Minister of Labour and myself, have been working quite diligently over the past while to get an updated memorandum of understanding which will cover areas where the Provincial Auditor felt the accountability was either weak or needed clarification or needed, for the first time, to be outlined. Those were three possibilities.

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This draft memorandum, which may not be its final form because we will be going over it with the Provincial Auditor, sets out a new accountability arrangement between the Ministry of Labour and the agency, and among other things it covers the following: It covers real estate investments; it covers the application of Management Board directives that may come down from time to time and how we're assured and the ministry is assured that we are complying with directives; it covers accountability for securing cabinet approval for any real estate transactions which we may be required to seek approval for; and it outlines the sharing of information that should occur between the ministry and the agency.

Again, this flowed from a recommendation of the Provincial Auditor. We fully agreed with it. I believe Mr Peters had also met with the Labour people and they concurred with getting the memorandum of understanding updated. We'll have our first meeting to go over it on November 24.

Ms Carter: So you would say that you're doing everything you can to implement the auditor's recommendations.

Mr King: From the very beginning, we have concurred with all of the recommendations of the Provincial Auditor's report. That agreement was in writing and it was contained in the report, and we are most willing and are complying.

In very broad terms, there were three areas. One of them was to deal with the section 64, and that's where we're preparing a report for the minister and for the cabinet. Another one had to do with the accountability, and that's the memorandum of understanding. The third one was to report back to the public accounts committee in 1995 or 1996, I don't remember, when the building is completed, to determine whether or not this was based upon the rental of the facility, the final cost, our work size, whether this was indeed in retrospect a good or a bad deal.

Mr Rosario Marchese (Fort York): Since points of order often do not work in terms of getting to some of the statements that are made by members that, in my view, are preposterous, I think it's useful to raise some comments that address that, and would want to speak to some of the things that were said at the last subcommittee as a way of putting some things on the record.

In my opinion, the letters that were written by Mr King to Mr Peters, the letter, and the letter that was addressed to Ms Marland by Mr Peters, were for me sufficient in terms of whether or not we had dealt with the matters that had been raised there.

Mr King writes a letter that says: "I apologize for any misunderstandings about the objectivity and factual content." He did not say, "I apologize for having been misunderstood." He said, "I apologize for any misunderstandings."

Mr Peters writes a letter and says: "I have received the letter of apology from Mr King of October 27, 1993 in which he states that my letter of October 21 has clarified the situation for your committee.

"In my opinion this would put this matter to rest and would enable all of us to carry on the important work of improving the accountability framework in which the Workers' Compensation Board operates."

For me, it was sufficient that we had two letters between two people who have talked about the issue and the problem that addressed the matter. We then come back into committee in essence to deal with the issues of apologies and whether or not people have apologized appropriately. Part of my opposition to it was that given that this has been satisfied, I was in no way happy to have to satisfy the killer instincts of the opposition members on this issue, nor am I happy to satisfy the political partisanship of the opposition as clearly their questions have raised. I felt that what they wanted was public penance and grovelling, yes, and I think that's what they were trying to extract, which I think was totally inappropriate, in my view. The questions raised by Mr Mahoney continue to raise those very questions.

By the opposition members, again by the Conservative Party: She asks questions that have nothing to do with the relevance of what Mr King is doing, but raises the question of whether he is a member of the NDP -- I find that completely inappropriate -- asks questions about why he left Manitoba -- in my view, completely inappropriate -- and asks questions about whether this should be a political appointment or not. Since when in the history of political parties have we not made political appointments, as if somehow, when the NDP makes political appointments, it's a problem?

They know full well, having been in government, both of these opposition members, all of them that are here, that they have made political appointments in the past, as we are doing now on some of these positions. Why is it inappropriate for this government to make political appointments when we do and not inappropriate for Conservative and Liberal governments to make political appointments? I find it offensive.

Here we have Mr King and others present to address our questions. Given that, I will ask a question on the memorandum of understanding and ask Mr King, or anyone who can answer, when was the last memorandum of understanding updated?

Mr King: The best recollection we have is that it was approximately 1982 or 1983.

Mr Marchese: It was 1982 or 1983. Is it your understanding, or to your knowledge, have there ever been attempts in the past, since 1982-83, to update the memorandum of understanding?

Mr King: When Mr Di Santo and I arrived, we looked at the memorandum of understanding and believed that it required some updating because it was -- if not stale, it had to be looked at again and so I believe it was us that initiated discussions with the Ministry of Labour to begin working on an updated version. That may not have been immediately following assuming office in the spring of 1991; it may have been somewhat later in 1991 or early 1992, once we'd gotten a better sense of the things that were required, but yes, we did initiate a discussion on updating the memorandum of understanding.

Mr Marchese: So when you got into the position, or some of you got into the position, it was your stance that this memorandum needed to be updated.

Mr King: Very clearly, something that is 10 years old should be looked at. Whether or not it needed significant change is another question, but I think you should always be reviewing those sorts of things to see if they keep up with the changes that are occurring both in the way we govern and in the way the government is governing. Therefore, the review was under way and it was necessary, not predicting what changes might have occurred.

Mr Marchese: So the auditor has made a number of suggestions about things to change in the memorandum of understanding, and I presume you are working on all of those issues he has raised.

Mr King: We're working on everything we can agree to with the ministry that doesn't fall outside our jurisdiction or the ministry's jurisdiction. If there are things that fall outside the scope of a memorandum of understanding, we would be discussing with Mr Peters, and presumably with the minister, whether there's another forum where we could deal with the accountability question, because we can only go as far as our law and regulation allows us to in terms of memorandums of understanding. That's why we're going to be having the ongoing dialogue with the Provincial Auditor on this matter, to determine what will satisfy the necessary accountability framework that he is so rightly calling for.

The Vice-Chair: Two minutes left. Okay, we'll pass on to Mr Mahoney.

Mr Mahoney: Mr King, I want to first of all say that if Erik Peters is prepared to accept your apology, as has been indicated in a letter, that's one issue. Do you think it's necessary for you to apologize for misleading this committee with some of the statements?

Mr King: I did not mislead the committee.

Mr Mahoney: Could I just ask you to go with me to page A-231 of September 15 Hansard, if you have that there. In your answer you say: "As a matter of fact" -- a very important statement -- "As a matter of fact," not in your opinion, or not, "I believe this might have occurred."

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Mr King: Can we get a copy of that? I don't happen to have a copy of the Hansard.

Mr Mahoney: Could we get a copy of that? It's on its way to you. You're not giving us a subjective or objective opinion here; you're giving us a statement of fact and you're telling the committee this. I suggest to you that the statement I'm going to read would clearly influence the feelings of the members of the committee if we were to take it as read.

"As a matter of fact, the company that ultimately ended up as the real estate holding company, the numbered company 799, had been specifically audited by the Provincial Auditor's office in 1990, at which time the Simcoe Place development was known and it was known that 799 was going to hold the Simcoe Place. There was no mention," in that audit you're referring to, "of any impropriety, any breach of any spirit of law, any breach of any Management Board of Cabinet directives, so we had," you go on to say, "I suppose, some right to believe that we had the transaction subject to the special audit that was ordered by the public accounts committee."

You're telling the committee this, Mr King, as a statement of fact which would obviously influence the next question that a committee member might have, because what you are saying is that everybody knew about Simcoe Place, everybody knew the company was going to be held in, the auditor had done the audit, and therefore there was no problem.

The auditor goes on to say in his response to you, "This passage contains a number of statements which are not factually correct." He doesn't say they're misleading, he doesn't say they could be misinterpreted, he says they are not factually correct.

"The establishment of numbered companies," he says, "had not been specifically audited by the OPA," contrary to your statement. "The audit covered," he goes on to say, "among all investments, those held by numbered companies. However," and this is very important, "at the time of the audit, the numbered company had made no investments in Simcoe Place."

Then he says, "By the time of completion of the audit...September 1990, the WCB had placed advertisements in newspapers requesting pre-qualification information from parties interested in providing space" -- not necessarily building a new building but providing space; maybe we'll just stay where we are, maybe we'll move to another rental location, maybe we'll decentralize. I assume all those options were before the board and you were going out seeking proposal calls from companies interested in providing space.

He says in conclusion, "Therefore at that time the Simcoe Place development could not have been known to the OPA, nor was it known to the OPA that the `799' company was to hold the investment in Simcoe Place."

Mr King, this committee, when we call witnesses, particularly, as you have stated, someone who is a professional such as yourself, and we get a factual statement that says a complete audit was done in 1990, presumably before the NDP took office, of the Simcoe Place company that would hold that company, that a complete audit would have included examination under section 64 of the act, and therefore no comments were made about any improprieties or any breaking of the spirit of the law, then this committee would be led to believe that the Ontario Provincial Auditor had erred in some way when he did the audit in 1990 and did not inform the government or the committee or anybody of any improprieties. You have said that, as a matter of fact, he did all of those things.

I suggest, whether you did it intentionally or not, that you misled this committee as a result of that statement. Certainly, I would have been misled in reading your statement and hearing your answer. I would have been led to believe that a full-scale public audit was done by the Ontario Provincial Auditor in 1990. That would lead me to believe that perhaps the Simcoe Place development had been approved prior to that in some way by the board or by cabinet or by even the previous government. Such is clearly not the case; all that was agreed to by the Workers' Compensation Board, some time in 1990, was to go out for proposal calls because, "We've got a lease expiring some time down the road in a few years and we'd better think about where we're going to put all our employees, so let's run an ad and see what we can find out." That happened in September 1990.

I just don't understand how you as a professional can let that statement stand and how you can say that statement -- I will give you the benefit of the doubt and say it was perhaps simply made in error, perhaps made inadvertently, perhaps made under pressure. As I recall, there was a fair amount of pressure in those hearings, but you handled that, and I don't think you need Mr Marchese or anyone else to defend you. I think that's your job.

This committee has a statement here. Never mind that the auditor takes exception to it. When I read this statement, I say this statement is clearly wrong and I would appreciate it if you would apologize to the committee for having made it. Will you do that?

Mr King: I apologize to this committee for any misunderstanding that my remarks may have caused surrounding three and a half days of testimony.

Let me repeat, in response to the direct question, that in 1988 a holding company was created by the Workers' Compensation Board, the numbered company 799549. It was incorporated to invest in real estate in accordance with the Workers' Compensation Act and the Pension Benefits Act.

Audits had been done by the Provincial Auditor -- or under his direction, because there is an external auditor. They did review our holdings and our holding companies in the investment area. We got no question for the authority of 799 or other holding companies to hold real estate. I was personally very distressed to learn, through the report of Mr Peters, that we were in breach or contravention of Management Board directive 6.2, which had presumably occurred in 1988, by using 799 to hold the Simcoe Place investment.

We had mistakenly assumed that our authority to invest in real estate transactions like Simcoe Place had been reviewed or verified by the 1990 audit. We were wrong and we're taking every effort to ensure that we are in compliance with the Management Board directives.

The board of directors is considering a report on incorporating subsidiaries, the audit committee is discussing control issues surrounding subsidiaries, the investment committee is reviewing the performance of the subsidiaries and a new memorandum of understanding between the Workers' Compensation Board and the Ministry of Labour has been drafted and is ready for discussion with the Provincial Auditor.

Mr Mahoney: I know all of that. With respect, do you stand by the statement I read from Hansard, where you had made the direct statement of fact that the audit had been done in September 1990 on Simcoe Place, through the audit of 799? Do you stand by that statement?

Mr King: I may have been misunderstood as to whether everyone knew that the eventual facility strategy was going to be held by 799.

Mr Mahoney: Mr King, you may not have held a card in any political party but, frankly, you're answering questions the way people expect politicians to answer them. Do you stand by the statement, sir, where you have said as a matter of fact that the audit was done in 1990 of 799 and that it was known that Simcoe Place was to be held in that company?

I'm really not trying to back you into a corner. It may appear that I am. What I'm trying to get you to do, very simply -- and frankly I don't think the repercussions would go beyond here -- is to admit you were wrong, admit that this statement that was made by you in your capacity as vice-chairman of the board misled the committee, intentionally or otherwise -- and I'll give you the benefit of the doubt and say it was unintentional -- and you're sorry that that happened.

Not for any misunderstanding, because you can't misunderstand this: This says an audit was done in 1990. There's no way to misunderstand that. It's simple, black and white: An audit was done; Simcoe Place was known. It's not true, sir, unless you're saying the auditor is saying something that's not true, which I assume you're not.

Do you agree with the auditor that this statement is not true, number one, that it misled the committee, albeit unintentionally, and you apologize for having said it? I don't know how I can be more fair than that.

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Mr King: The audit I was referring to having taken place in 1990 actually occurred in 1991. I was mistaken in the information I provided. It was done by Anderson Consulting. I didn't know the date. At the time, I made the statement that it was 1990. I made a mistake. The audit was done in 1991 by Anderson and company acting -- and I'm not too sure of the precise terminology here, Mr Mahoney. I don't know whether it's on behalf of; we have an external auditor who works under the direction of -- this may be more precise terminology -- or under the umbrella of the Provincial Auditor.

So I did make an error in the date of the audit, which was 1991. I apologize for having made that mistake; it was unintentional on my part. But it was not an attempt, nor did it try to mislead this committee.

Mr Mahoney: For clarification, because it's very important: You said the audit you're referring to -- that this statement is accurate if the date is changed from 1990 to 1991?

Mr King: I think it's confusing the issue as to the timing of this thing. The information I've just received was that the audit was in 1991, but that may have been when it was reported. It may have been signed off in 1991 and done in 1990.

Mr Mahoney: But it's the same audit.

Mr King: Yes, it's the same audit. I'll repeat that I have not misled this committee, that the numbered company 799 was a part of a general audit that was done. Admittedly, Simcoe Place was not at that time being held by that numbered company. I perhaps went too far in assuming that it was known that it was going to hold Simcoe Place, but I deny any attempt to purposely mislead.

Mr Mahoney: I said "unintentional."

Mrs Margaret Marland (Mississauga South): Mr Chairman, I just want to make it very clear why I've stepped out of the chair this morning, which I'm entitled to do at any point of this committee's deliberations.

I did not step out of the chair when we were hearing from the WCB in the initial reviews, but I'm doing so now because Mr King has referred back to the January meeting of the public accounts committee, which is a committee I am a member of, and it is the committee where I was the committee member who asked Mr King how many legal opinions they had as to whether or not the WCB could go ahead to be involved with an investment company in real estate and whether or not that contravenes section 64, section 64 being that section which required the board, if it chose to go that route, to get an order in council to do it.

What happened was that some time during the afternoon -- and certainly not at 6 o'clock; as I recall, it was some time before 4 o'clock -- I asked Mr King if he would provide the legal opinions that the board had obtained, that had been paid for through public money, to the public accounts committee, at which time you said yes, you would, and I asked how many there were and you said several.

When you came the next morning with one legal opinion, I suggested to you, Mr King, that it was a matter of convenience that you had been able to bring one legal opinion and it happened to be the legal opinion that supported what you had gone ahead and done. I said to you that perhaps there were no other opinions except opinions that did not agree with the position the board had taken in going ahead with the building. You said, "We do have other opinions," and I said it was pretty difficult, and it still is difficult for me, to think that you have your legal opinions in different files; the ones that are for what you've done and the ones that were against what you did in separate files.

You referred this morning to the fact that you were accused of lying. In fact, you subsequently sent me a letter, as I recall -- which I don't have with me this morning because I didn't intend to speak this morning -- where I think you challenge me to repeat my comments outside of the committee room because you said that you took strong exception to the fact that I was suggesting that you were lying.

I feel very uncomfortable about the fact that you have now, in anybody's words, misled -- whatever words you want to use; we're playing semantics here -- two committees because you did tell the standing committee on public accounts that you had several opinions, and "several" certainly would mean more than two. You produced one opinion. At that time, I said something about, "Well, why wouldn't you have your legal opinions all together?" and you said you didn't have time to get them.

It's still hard for me personally to believe that you wouldn't have those legal opinions in one place, and I still feel, as a member of the public accounts committee -- which subsequently was closed down by the NDP government members who passed a motion to say there was to be no more discussion about the WCB building, no matter that it's a $180-million boondoggle for the taxpayers of this province at a 20-year mortgage at 10_% mortgage interest rates, which was questioned by the Provincial Auditor. The Provincial Auditor did explain that he was very concerned about that kind of interest rate and that kind of commitment for 20 years.

Also, back in January, when the Minister of Labour was asked what he thought about this building going ahead, he said -- and I don't have the notes with me -- something to the effect that he didn't know it was progressing so far, and this was in spite of the fact that the WCB board sends the minutes of its meetings to the minister's office on a regular basis. So somebody in the minister's office had obviously miscued and not read these minutes and certainly not informed the Minister of Labour that it was going on. Also, even the Treasurer at that time said he'd like to look at this decision to build this ivory tower for the WCB, that he'd like to look at it again.

The point is that when we were talking about it in January, the final contracts, as I understood, had not been signed. What really sticks in my craw is the fact that in January we had an opportunity as legislative members and responsible committee members of whatever committee we're on to save this project from going ahead at this time with that kind of 10_% mortgage for 20 years, and it all pivots on whether you had a legal right to do it under section 64.

I think it's ironic that you're telling the committee this morning that you asked the auditor for his legal opinions. The point was that you told the public accounts committee that you had several legal opinions and you didn't produce them the next morning. You only produced the one that was in favour of your position. Under section 64, it's not difficult to understand that you're not able to form a numbered company to invest in real estate unless you have an order in council. You didn't have an order in council and the Minister of Labour didn't even realize that you were that far along with this project.

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So I still consider that you have misled the public accounts committee by what you stated in January, and you said, "We only met the next morning until noon." I don't remember the hours the next day. But it's not good enough that you say you didn't have an opportunity to bring those legal opinions. You did; you brought one that was in favour.

Frankly, I think that the whole thing about this $180-million ivory tower for your board is a black mark on this province at a time that the taxpayers in Ontario simply couldn't afford it. I've heard before that you say, "Well, it's not the taxpayers' money." I don't know who you think business and industry that pay the assessment towards the operation of compensation for workers in this province --

Mr Mahoney: Mr Di Santo said that.

Mrs Marland: Who pays for it?

Mr Mahoney: You said that.

Mrs Marland: Everybody pays for it and everybody is paying for this building. The crime is that there are still workers in this province who can't get legitimate settlements that they're entitled to because the process takes too long and it isn't working.

On top of that aspect of your operation, we've had to deal with this building which you haven't chosen to deal with up front and now it's just sickening in fact. In my opinion, you have misled two committees. You can play all these words about misunderstandings, misinterpretations of what you said. I'm just an ordinary member and I sit in committees, as I did in public accounts in January, and I listened to what you said. That's all I can do.

When you say you have several opinions and you don't produce them after we ask -- why did we ask for them? Because we wanted to see how many firms and which firms they were that said it was okay to go ahead in spite of the fact of not having the order in council.

I'm still very sick about this whole affair of this building because I don't think that, as the vice-chair of administration for the Workers' Compensation Board, you have been dealing responsibly with this Legislature from your position.

Mr King: I've already gone through the events of January and I'm sorry that I couldn't produce in the time lines available.

Mrs Marland: Why couldn't you? Where are they filed?

Mr King: Not everyone in the Workers' Compensation Board is at the same location. One of the decisions was an investment decision and one of them was a tenancy decision, and our investment offices are not in the same building as our tenancy offices. We do have different offices. I won't go into it.

As I said, I stayed behind to try to find out how to get the information to the committee, but I apologize. I didn't get it to you within the time frames. Let me also indicate to this committee that, in hindsight and having the advantage of having read Mr Peters's report, having read his findings about the spirit of the law, I certainly would have learned a lesson regarding accountability and it would be certainly my intention that if I'm ever advising the board of directors on a matter like this, we would go and seek cabinet approval under section 64.

Mrs Marland: You have learned a lesson and it has cost this province possibly $180 million, because perhaps you may not have received an order in council; in other words, approval of the cabinet. Certainly from the comments by Mr Mackenzie, the Minister of Labour, and by Mr Laughren, the Treasurer, they had second thoughts.

In fact, everybody was suddenly scrambling to go through minutes that they had. They were trying to take it back and blame the Liberals. At one point, in one of the answers I heard in a scrum with Mr Mackenzie he was saying, "Well, of course, if you do read the minutes, it was actually approved by the Liberals." The Liberals did not sign the final document that approved this project going forward.

Mr Mahoney: Which is totally wrong. Right, Mrs Marland?

Mrs Marland: What would you tell us today? Would you tell us today that you have several opinions that do support the right of the board to ignore section 64 without an order in council?

Mr King: I don't want to get into numbers here but there are at least three legal opinions that the Workers' Compensation Board has got. There is the opinion of Aird and Berlis of February 18, 1991; of Stikeman, Elliott, May 6, 1992; and Weir and Foulds of May 7, 1993, indicating that we were not required to go to the provincial cabinet under section 64.

Mrs Marland: What was the date of the 1993 legal opinion?

Mr King: May 7, 1993.

Mrs Marland: Very interesting. After I asked you the question in January. I asked you in January how many legal opinions you had. Your answer wasn't two; it was several. So today you're citing three and one of them you received four months after I asked you the question. Very interesting.

Mr King: I had met with Weir and Foulds long before May 7, 1993, as part of my own duties as vice-chair of administration coming new on the scene. I had them go through all of the documentation and give me verbal advice as to whether or not this was a legitimate deal. I received that verbal advice.

Mrs Marland: When did you receive it?

Mr King: That advice was put in writing May 7, 1993. The reason we were able to get it in writing quickly was because they had previously reviewed the deal.

Mrs Marland: So would you agree that you misled the public accounts committee in January when you said you had several legal opinions and that you would agree to produce those for us? In fact, you had two.

Mr King: No. I'd previously indicated there was an internal legal opinion from our own legal branch. There was the opinion of Aird and Berlis and there was the opinion of Stikeman, Elliott.

Mrs Marland: I think if you re-read Hansard, from my questions we weren't talking about internal legal opinions, because in order to protect the taxpayers, obviously, we're interested in external legal opinions.

Mr King: I have my response in January in Hansard and the question was: "Based on three legal opinions, am I correct?

"Mr King: Yes. I said two and possibly three."

Mrs Marland: Right. What does "possibly" mean? Are we into this realm of misunderstanding now? I'd like to know what "possibly" means. Does it mean that there was one or not? Or does it mean that in May of this year you decided you'd better get it in writing?

Mr King: Some time prior to May of this year, the Provincial Auditor suggested that we receive a legal opinion on what I'll call the "blanket," meaning both the investor and the tenant deal and get that in writing because, as I recall, an oral opinion was not sufficient from him to deal with. Therefore, we sought that in writing.

The reason I answered "two and possibly three" was because I knew of the two. I knew of the Aird and Berlis and of the Stikeman, Elliott. I didn't know whether the internal one would suit the purposes of the committee or not because it may not have spoken to the point of whether we had to deal under section 64.

Mrs Marland: Well, you said you'd talked -- who is the third one that you said you talked to? You said you knew of two.

Mr King: Weir and Foulds I talked to prior to the spring of 1992.

Mrs Marland: So you did --

The Vice-Chair: Mr Marchese, you're next on the list. Sorry, Mrs Marland, your time has run out.

Mr Marchese: I want to just make reference to a recommendation made by the auditor on page 14 and would ask Mr King to respond to it as soon as I've read this into the record.

Recommendation 14 says:

"While preserving and safeguarding the legislated autonomy of the WCB for most of its activities, the powers and duties of the board of directors of the WCB should be reviewed and revised where necessary. There should be an explicit statement in the memorandum of understanding between the minister and the WCB that the powers of the WCB are limited to those stated in the Workers' Compensation Act and that the board of directors and senior management are responsible for obtaining good value for money in transactions of this kind. The appropriate extent of the WCB borrowing power should also be defined.

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"Measures should be taken so that a schedule 3 agency cannot use a complex commercial arrangement rather than seeking cabinet approval. These measures should restructure the accountability of the WCB to the minister to ensure that the WCB's interpretation of its statutory authority is acceptable to the minister and the WCB adheres to all Management Board of Cabinet directives for schedule 3 agencies and any other directives that the minister believes should apply to the WCB. These should be detailed in the memorandum of understanding between the minister and the WCB. The memorandum of understanding should also be updated," which I touched on the last time.

Could you comment on what you're doing with respect to these recommendations made here?

Mr King: Upon receipt of the Provincial Auditor's report on the facility strategy, it was very apparent in its first-draft form that we had got to do several things to meet the recommendations that he brought forward.

I've commented that we have agreed with the recommendation to bring back the detailed costs in the analysis in 1995 or 1996 -- I forget the precise time frame -- to the public accounts committee and it can make a judgement as to the value of the operation to the WCB, and to the province presumably.

Secondly, we did agree totally with the recommendation that we do a full report to the minister and the cabinet on the economics behind the building.

The third area you're covering is the so-called accountability through the ministry of the agency. That, in my view, is as serious as any of the three recommendations, perhaps the most serious one, because I think that's how we can try to assure the Legislature and the legislators that we are accountable, that there are rules of accountability that we clearly understand and that legislators clearly understand.

That's the work the Deputy Minister of Labour and I have been working on and that is the work we are going to proceed to meet with the Provincial Auditor on on November 24, because it's a very complex issue. It involves powers of the board of directors: Should there or can there be limitations on the board of directors? What limitations can there be in a memorandum of understanding? Where does the law perhaps have to be looked at in terms of the accountability of the WCB for its actions? Action is taking place on numerous of these.

I've already indicated our board of directors is dealing with the incorporation of subsidiaries. The audit committee is looking at the control issues with respect to subsidiaries. The staff of the Ministry of Labour and the WCB have been working on a memorandum of understanding to cover the very points you raised in the statement you just read.

We maybe don't have it right yet and we would accept valuable critique from the Provincial Auditor on where we can improve the accountability framework. I believe one of the members here indicated that they expect a more active role for the Provincial Auditor. I think that's what we're trying to respond to: How can we be more accountable? We're in total agreement with that and are working very hard to satisfy that.

Mr Marchese: I should say that on the issue of accountability, most of us, irrespective of political parties, are interested in how agencies become more accountable, more visible, to the public, and procedures for the public to be able to respond to what you are doing or not doing.

I, as one of the members here, want to suggest that is the big concern to us. Clearly what you're saying is that you're dealing with that in terms of powers of the board, limitations the board might have through a memorandum of understanding and so on.

You'll be meeting on the 24th with the auditor to talk about that. There is nothing specific about it that you can either speak to or raise at this time. Is that the case?

Mr King: I do have a general outline of the sorts of things the auditor has called for in terms of the accountability framework. We've identified, through both the ministry and the Workers' Compensation Board, those things that we can address by a memorandum of understanding.

But given the nature of the law, of the Workers' Compensation Act, there are some issues that we cannot deal with through a straight memorandum of understanding because if the board is given absolute jurisdiction in law it may not be prepared to see that fettered in some way through a memorandum of understanding which can't supersede law.

That's the very thing we're trying to work our way through. Here is an example of the guiding principles, though.

Mr Marchese: I was about to ask you. Go ahead.

Mr King: The Workers' Compensation Board recognizes the government accountability structure and the WCB's relationship with government, the minister and the cabinet and the Legislative Assembly. So we recognize we're accountable. We're accountable to the stakeholders as well in consultation and we'll operate in a cost-efficient and economical manner: service quality, excellence in management.

The sorts of things that you were reading off, value for money, these things are contained in our initial draft. But I hesitate to table this until we've had discussions with Mr Peters to see where we might make improvements. But it's all there ready to go forward for that discussion.

Mr Marchese: I'd be interested to understand some of the matters that are raised by the auditor which are not covered by the memorandum of understanding. You might, for example, define the appropriate extent of the WCB's borrowing powers or the WCB's interpretation of its statutory authorities acceptable to the minister. I think the memorandum of understanding may not cover those. Are those the kinds of examples that need to be dealt with through a new rewriting of a memorandum of understanding?

Mr King: Under law the Workers' Compensation Board is given absolute jurisdiction as a quasi-judicial body to interpret law save for some very narrow areas. Therefore, although I'm not a lawyer, it would be my opinion that the WCB would not voluntarily agree to fetter its absolute jurisdiction.

But the WCB recognizes that senior government may wish to somehow fetter that jurisdiction and that's what we're talking about in terms of accountability. Discussions are under way as to whether you can do this through regulation or whether a change in law necessary.

I can't tell you where we're going with that, except to say it's on the table for discussion, and those are areas where we are apt to receive advice from Mr Peters on how we proceed if we don't believe that legally the board can give up or fetter discretion it has under law.

Those are all under discussion, though, and have been identified in the memorandum -- not in the memorandum, but where we cannot deal with them in the memorandum, we realize we're going to have deal with them at a different forum.

Mr Marchese: I just want to thank Mr King for appearing. I think he has answered our questions and I believe he has answered the questions of the opposition as adequately as can be. I would recommend, in thanking Mr King for appearing, that we move on to deal with the subcommittee report. I move that.

The Vice-Chair: Thank you. I'll get the consensus of the committee.

We have about 10 minutes left and we have a subcommittee report to deal with. It will be up to the committee if you want to continue for two questions, two minutes each, or if you want to move on, adjourn this portion and deal with the subcommittee.

Mr Mahoney: I have some questions of Mr Di Santo and have not had an opportunity to put them. I'm sure he would like to hear them. I was anticipating having that opportunity.

The Vice-Chair: It's up to the committee, if you want to continue for a question each or if you want to move on to something else. We could argue about it. We might as well give each two minutes and it'll be over.

Mr Marchese: If we still have certain questions in two minutes, I suppose we could try.

Mr Mahoney: I have questions for Mr Di Santo. I'm going to need more than two minutes.

The Vice-Chair: The committee will determine how long we have to deal with it; it's up to the committee, not up to me as Vice-Chair.

Mr Waters: I have an appointment, Mr Chair.

Mr James J. Bradley (St Catharines): You're not going to play the blocking game over there again, are you?

Mr Marchese: Two minutes each, Mr Chair?

The Vice-Chair: Okay, two minutes each. I think that's fair, due to the time.

1150

Mr Mahoney: Two minutes. You're going to have to give me really short answers and I'll try to give you short questions.

The statement in Hansard that I referred to, Mr King's statement of fact, Mr Di Santo, that an audit was done in 1990, that the audit included Simcoe Place, that it included 799, the company that it was ultimately held in, is a statement of fact that's there in Hansard.

The auditor has taken exception to that statement and said that it is not factually correct. Do you agree with the auditor or do you stand by Mr King's statement as the chairman of WCB?

Mr Odoardo Di Santo: As Mr King has told the committee repeatedly, we have accepted all the conclusions and the recommendations of the auditor --

Mr Mahoney: That isn't what I asked you, sir.

Mr Di Santo: -- and we are working on them.

Mr Mahoney: In two minutes, I wish you'd answer my question.

Mr Di Santo: Yes. That's a specific question that I will answer this way: I think Mr King clarified that in 1990 in fact the Provincial Auditor did not audit Simcoe Place because --

Mr Mahoney: So if he did not audit Simcoe Place, then the clear follow-up would be that the statement is incorrect. The statement that appears in Hansard from Mr King is incorrect.

Mr Di Santo: For sure, the honourable member will allow me to complete my answer. I agree that, taken literally, this statement is incorrect, but it has to be seen in context. I think Mr King tried to explain this morning that there was some confusion in the auditing of the investment fund of the Workers' Compensation Board. In fact there was a review of the fund related to the year 1990 --

Mr Mahoney: I don't wish, in the short time we have, with due respect, you to give me Mr King's answer.

Mr Marchese: On a point of order, Mr Chair.

Mr Mahoney: You're giving me Mr King's answer. That's not what I'm asking for.

Mr Di Santo: I'm not --

Mr Mahoney: I'm asking for your opinion as to whether the statement is correct or incorrect. You have said it's incorrect and I accept that.

Mr Marchese: You should take points of order, Mr Chair.

Mr Mahoney: My next question is, since Mr King won't apologize, will you as the chair apologize for this committee having been misled by that statement by Mr King?

The Vice-Chair: That's the last question. Now we'll wait for his answer.

Mr Mahoney: Will you apologize?

Mr Di Santo: My answer is that, given that there were two different reviews of the --

Mr Marchese: My point of order --

Mr Mahoney: What are you so protective about? These are big boys here. They can handle themselves.

Mr Marchese: You should allow the individual to answer the question --

Mr Mahoney: They can take care of themselves. They don't need you standing in like some kind of a hack trying to defend them.

Mr Marchese: -- and the chance --

Mr Mahoney: They're here. We don't want to hear from you.

Mr Waters: You don't want to hear from anybody.

Mr Marchese: You don't want to hear from anyone, Mahoney.

Mr Mahoney: I want to hear the chairman apologize.

The Vice-Chair: Obviously, he's not doing it.

Mrs Witmer, you have the next time.

Mrs Witmer: I have a question for Mr King. I heard a conflicting statement. I heard you say, Mr King, that you were a professional appointment based on your merit and ability to do the job. I heard Mr Marchese say that indeed you were a political appointment. Would you agree with Mr Marchese that your appointment was a political appointment?

Mr King: I had previously agreed that the appointment is made through an order in council, which in and of itself is through the cabinet or the Lieutenant Governor, but that I'm a professional civil servant.

Mrs Witmer: So you do not believe you're a political appointment, as Mr Marchese has indicated you are?

Mr King: I'm a government appointee. I'll certainly bring my résumé and go over it with the committee members if they wish. Governments have sought me out -- I haven't necessarily sought them out -- because of a certain expertise I own.

Mr Mike Cooper (Kitchener-Wilmot): Just to continue on with that, let's be perfectly clear that we have set up the committee where most of these appointments are reviewed now, something that's never happened in the past.

Mr Bradley: This committee is a joke.

Mrs Witmer: It's a joke.

Mr Cooper: But what I'd like to say right now is workers' compensation has been in the news all of 1993.

Mr Bradley: You've got six broom handles there just sweeping things under the rug.

Mr Cooper: We went through the standing committee on public accounts and the Workers' Compensation Board was there; the standing committee on government agencies and the Workers' Compensation Board was there; the standing committee on estimates and the whole committee revolved around workers' compensation; in the House we've had question period filled with workers' compensation; we've had the Premier's Labour-Management Advisory Committee set up. Obviously there are problems, perceived or real, at the Workers' Compensation Board.

The workers' compensation people, both Mr Di Santo and Mr King, have come to committees and have always been as forthright as they could possibly be. Obviously, what they've done is given answers that weren't satisfactory to the opposition. It was probably political, because they don't agree with what's going on at the Workers' Compensation Board. They've made is perfectly clear that they want to privatize workers' compensation.

Mrs Marland: How about misleading the committee?

Mr Cooper: I would suggest that we should free these people up to get back and do what they've been paid to do, and that's fix the problems at the Workers' Compensation Board, which obviously they've been trying to do because they've been very forthright today in saying they've been reacting to the auditor's report and trying to fix things. I think we should let them get on with their business and get them out of committee --

Mrs Marland: So you think it's okay to lie to a committee.

Mr Cooper: -- because obviously we're in a political dialogue here and we're solving nothing.

The Vice-Chair: Thank you, Mr Di Santo, and thank you, Mr King, for appearing before the committee.

SUBCOMMITTEE REPORT

The Vice-Chair: This committee will now deal with the report of the subcommittee.

Mr Waters: I'll move its adoption.

The Vice-Chair: Mr Waters moves its adoption. All those in favour? Opposed? It's carried.

This committee adjourns now until next Wednesday. I believe the subcommittee will meet next week at a quarter to 10. Thank you very much.

The committee adjourned at 1156.