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Government probes find 'gross mismanagement' at Alberta Energy Regulator

Alberta's auditor general said he found gross mismanagement and a waste of public resources at the province's energy regulator, and the ethics commissioner accused the agency's former CEO of conflict of interest in relation to a not-for-profit entity set up to train staff at foreign regulators.

In separate reports released Oct. 4, Alberta's auditor general, the Alberta Public Interest Commissioner and the province's ethics commissioner found that former Alberta Energy Regulator CEO Jim Ellis was in a conflict of interest for his role in developing the International Centre of Regulatory Excellence, or ICORE. The not-for-profit company was set up as an arm's-length entity by the regulator, known as the AER, in 2017 to train regulatory staff in other countries. The report estimates that C$2.3 million the regulator spent on ICORE activities has yet to be recovered.

"Financial, information management and human resource controls were ignored and overridden to hide ICORE activities and misuse public resources," Auditor General Doug Wylie's report said. "Controls to monitor and track AER expenses for ICORE activities were at first non-existent and then poorly implemented."

The AER is funded by levies on companies in Alberta's energy industry, including Suncor Energy Inc. and Canadian Natural Resources Ltd. The reports, which were the result of independent investigations by all three agencies, were based on information obtained by a whistleblower and on public complaints. Ellis resigned in late 2018. The entire AER board was fired by the recently elected government of Premier Jason Kenney in September. ICORE did not serve the purposes of the industry and instead represented the interests of Ellis and others, the ethics commissioner's report said.

"Former AER President and CEO Jim Ellis had a conflict of interest in that he furthered his own interest and improperly furthered the private interest of three other employees," Ethics Commissioner Marguerite Trussler said in a news release that accompanied the report. "The primary motivation behind ICORE not-for-profit was to provide future employment for Mr. Ellis and others."

The government launched a review of the AER's governance structure and purpose that is expected to be completed by mid-2020. The events identified in the report took place between 2015 and 2018 when the left-leaning New Democratic Party government of former Premier Rachel Notley was in power.

"Recent reports from the Auditor General, Ethics Commissioner and Public Interest Commissioner reveal a disturbing number of unscrupulous activities within the Alberta Energy Regulator's leadership over a number of years from 2015 to 2018," Alberta Energy Minister Sonya Savage and Environment and Parks Minister Jason Nixon said in a joint Oct. 4 statement. "The recommendations contained within these reports will inform our government's review of the AER, and we would expect the interim board to implement these recommendations."

The auditor general's report recommended that the AER evaluate whether any other funds are recoverable from ICORE. The reports did not recommend action against Ellis and the former AER board.