Last month, the Independent published an investigation and interview with Liberal Leadership candidate Andrew Furey, about his experience as a director of three corporations—Alderon Iron Ore, Sequence Bio, and Canada Fluorspar. Each of those corporations have lobbied the government or have received loans from the government in recent years.
The title of the piece, “On corporate ties, Furey has nothing to hide,” was inspired by the following exchange during our interview.
“The Indy: So these [corporate director] positions, I assume were a pretty significant source of income for you in recent years? And you’ve omitted them from your public profile on your website. Can you explain why?
Furey: Well, by Sequence Bio, there was no income generated from that. I would be happy to disclose the income from others. Of course Alderon would be publicly visible as it was a publicly-traded company. I’d have to look, but I would be happy to disclose what I was remunerated for, with respect to [Canada Fluorspar].
OK, that would be excellent, yeah. And Alderon, I found it from 2018, but I couldn’t find it from the other documents as they’ve taken their website down and it’s a little tricky. So if you could prepare to share that, that would be amazing.
Yeah, no, for sure. I’m open and honest, I have nothing to hide. And the public—it is publicly available information, so.” [Emphasis added.]
(There are some minor inaccuracies in his responses that I will clarify. On follow up, Furey clarified that he did receive stock options as compensation as a director of Sequence Bio. He also owns stock in the company, but we have been unable to verify that these were received as compensation.
On the board of Alderon Iron Ore, Furey received compensation worth $93,417 for 2017 and $78,465 for 2018 according to official reports published by Alderon. Furey’s compensation for 2019 has not been published because the company went out of business earlier this year before their annual AGM. His compensation from the two private companies is not public information.)
A month later, the promised disclosure has not been made, and I no longer believe it is coming.
After three weeks of reminders asking for this promised information, I was told by his campaign: “We’re waiting for feedback on some info that may be commercially sensitive. Sorry for the delay.”
Last week, Furey sent the following statement: “Thank you for your query about remuneration for being a member of Board of DIrectors of various companies. Since your initial interview on the topic, I’ve taken the time to sit with the Commissioner of Legislative Standards to better understand my potential disclosure requirements and ensure I’m being completely open and transparent. I’m currently reviewing that information.”
I replied: “Dr. Furey has no legal requirement to publicly disclose details of compensation he received prior to entering public life. He did however volunteer to reveal those details in a recorded interview. I surmise from this statement that he does not intend to fulfil that commitment. Unless you provide clear indication otherwise, I will proceed with that understanding.”
I have received no response since last Friday.
Legally-Required Public Disclosure
When elected to office, MHAs are required to disclose to the Commissioner their “private interests”—which roughly means assets, income, or compensation exceeding $10,000 in value (precise definitions can be found in the House of Assembly Act). A more limited “public interest disclosure statement” is available for public viewing at the Commissioner’s office. I made copies of the 2019 statements, and you can find them here:
2019 Public Interest Disclosures for MHAs
Most MHAs have nothing to disclose except their MHA salary, their spouse’s salary, and a “credit obligation with recognized lending institution” such as a mortgage. Many also own some land, a rental property, or a small business. But a few (including senior cabinet ministers Dwight Ball, Tom Osborne, and Siobhan Coady) own family trusts or holding companies whose assets are concealed from the public (though not from the Commissioner). This creates a blind spot to full transparency.
Another deficiency of the Act is that there are no specific rules about stock options (or other financial derivatives). A stock option is a kind of bet on a company; if the value of a company goes up, a stock option gives you the “option” to buy “stock” at a discounted price. If the company does well, the payoff from stock options can be several times greater than from simply owning stocks.
Stock options are often paid to directors of fledgling companies because they don’t cost anything unless the company grows and is successful. Furey received stock options from all three corporations he served on, and in the case of Alderon—the only one for which we have public records—most of his compensation was in stock options.
Putting a dollar value on a stock option is tricky, because it strongly depends on what happens in the future. They are typically priced using a mathematical formula (called the Black-Scholes model) which makes a bunch of assumptions that might not hold in practice. For example, they don’t account for, say, the owner of the option gaining political power that could be used to advance the interests of the company in some way.
Stock options pose a particular concern for conflict of interest, so I believe the legislation should give them special treatment. I would prefer for all stock options owned by MHAs to be publicly disclosed, no matter their so-called “fair value.” Ideally, MHAs should use or sell their stock options before taking office.
The public should also be granted more information about assets held in trusts or holding companies, especially if they are wholly owned by the MHA and spouse. At present they can too easily be used to cloak private interests that ought to be publicly disclosed.
It would also be nice if we could join the 21st century and put disclosure statements online, instead of only keeping paper copies in an office in St. John’s. Other provinces have figured this out—surely we can too.
These proposed changes to disclosure requirements and transparency might help improve public trust in government and allay concerns about self-dealing and cronyism by public officials. As Dr. Furey said during our interview “Newfoundland and Labrador is too small, everyone knows somebody, knows a cousin that has something to do with some business, and we need to have that extra level of scrutiny when decisions are being made that affect the business affairs of the province.”
Photo via the Andrew Furey 2020 campaign.
The Independent is 100% funded by its readers. Your pay-what-you-can subscription or one-time donation provides a base of revenue to keep our bills paid and our contributors writing. For as little as $5 a month, you can fund the future of journalism in Newfoundland and Labrador.