Use of companies to hide records must end

Stanley Tromp, The Province; Vancouver, B.C., 21 Mar 2016

Over the past two decades, a big problem has arisen, one that is a hot topic at the legislative committee now reviewing B.C.'s freedom of information law.

Public bodies have been spawning wholly owned and controlled puppet companies to perform public functions and manage billions of dollars in taxpayers' money, all while claiming these are not covered by FOI laws because they are "private and independent." This trend is quietly and adroitly defeating the entire purpose of FOI.

After the Vancouver School Board's private companies lost public money in overseas business adventures, the Education Minister in 2007 promised to add these to FOI coverage, but it was never done. Why? B.C. local municipal subsidiaries are covered by the law.

Such companies owned by B.C. Crown corporations were related to two financial mishaps of the 1990s: Hydrogate, by which B.C. Hydro formed a subsidiary, IPC International Power Corp., to invest in a Pakistani power project and B.C. Ferries' $500-million fast-ferries loss through its subsidiary, Catamaran Ferries International.

Yet today B.C. Hydro claims that two of its wholly owned companies, Powertech and Powerex, are FOI exempt, so they denied requests for their records.

The problem was highlighted nine years ago when I filed an FOI request to the University of B.C. for records of three of its companies. One was UBC Properties Investments Ltd., a monopoly that develops all UBC's land and manages student rental housing. The university refused, I appealed to the information commissioner, and in 2009 the adjudicator ruled for disclosure, writing: "All three bodies were entities created and owned 100 per cent by UBC and accountable to it."

Then UBC appealed that order, as did Simon Fraser University in a similar case. The B.C. Supreme Court overturned the commissioner's order, stating that one must not "pierce the corporate veil." And there it stands today.

What are the usual arguments against FOI coverage? Firstly, such entities may bemoan the risk of "competitive harms." But this is illogical because most have no real competition, being monopolies within their parent institution. Secondly, it would not matter even if they did, because they are already fully protected from competitive harms in the FOI law's Sections 17 and 21.

If such claims were accepted, then no Crown corporations would be covered by FOI and yet they all are. Even former prime minister Stephen Harper amended the federal FOI law to cover all Crown corporations' subsidiaries.

By contrast, the Britain's FOI law includes companies "wholly owned by the Crown." Such coverage is also found in the laws of the U.S., France, New Zealand, India, Nepal, Uzbekistan, Nigeria, Russia, Iran, Israel and others.

For now B.C. public bodies can still veil their records in the vaults of such companies in a process critics call "pseudo-privatization" and "information laundering." This secrecy creates potential breeding grounds for waste, wrongdoing, and risks to public health and safety.

B.C. needs coverage of all entities that perform public functions, such as Providence Health and the First Nations Health Authority, as well as student societies, all excluded from the FOI law.

One official told the review committee the problem is "very complex," adding vague warnings of "unintended consequences," yet other nations do not find it so. B.C. officials are calling for more study on the issue, but that is just a stalling tactic.

The B.C. minister for FOI policy said in 2011, "It seems reasonable to me that (Crown companies) would be covered." The government then voted down an MLA's private-member's bill that would have achieved just that.

UBC residents and students have protested UBC's secrecy about its real estate company since its creation in 1988. Must they now wait for another quarter century? Or will our "open-government premier" finally resolve this long-festering sore? For real freedom of public information, let's catch up to the rest of the world.

Stanley Tromp’s report on B.C.'s FOI law, The Vanishing Record, is at his website: www3.telus.net/index100/foi.