Going... going... gone! $1,000,000-plus missing from economic development fund

from Shelburne County Today
Nov 22 2007

Team Shelburne will never see Boy's School money, says SWSDAIn a stunning revelation by the attorneys for South West Shore Development Authority (SWSDA) and its CEO Frank Anderson, Supreme Court Justice Allan Boudreau and courtroom observers were told Thursday in a Yarmouth courtroom that as much as $1,000,000 or more of proceeds from the Shelburne Youth Centre (Shelburne Place) has disappeared into the general fund of SWSDA and is unlikely to be recovered. Attorney Reuben Dexter, representing Ocean Produce International, told the court that documents he recently got from SWSDA indicate that "monies may have been spent on all kinds of improper things." (see Follow the money below)

In a sworn affidavit submitted to the court by Anderson for the hearing, he testifies that "... there is no longer any specific sum..." to preserve for OPI's legal action and that the $1.27 million dollars from the Youth centre are now merely "a SWSDA accounting entry."Letterhead and legal fees "Team Shelburne will never see that money," admitted SWSDA attorney Robert Belliveau, "and the money was never supposed to be in the hands of Team Shelburne. This is government money and only SWSDA is authorized to administer it." Belliveau told the court that SWSDA has spent the money on everyday items like staff and stationery. According to financial statements from SWSDA, the estimated $400,000 in legal fees to date that SWSDA has incurred in a protracted series of lawsuits with OPI would also be paid from that fund. The hearing Thursday was part of an action for fraudulent conveyance of funds and breach of trust brought by OPI against SWSDA, CEO Frank Anderson, Ralston MacDonnell, the Shelburne Area Industrial Commission, all municipal bodies in the county and CVN Holdings, which holds the mortgage for Shelburne Place. OPI is seeking to protect the funds in the case that they win their $5 million lawsuit against SWSDA.Unbeliveable"This is unbelievable," Shelburne Municipal warden Paulette Scott told SCT. "Somebody is going to have to be accountable for those funds. I am not going to rest until we get to the bottom of this." Shelburne mayor P.G. Comeau was also upset at hearing about the court testimony. "I remember the promises made to us by at least six provincial ministers about getting the proceeds from the sale when this all started," said Comeau. "I'm certain that my council will not lie back and take this resting and I wish I could address the court myself." Neither Don Harding, solicitor for the Towns of Shelburne, Clarks Harbour and Lockeport, plus the Municipality of Barrington and the Industrial Commission, nor Shelburne Municipal solicitor Kevin Latimer attended the hearing. Latimer sent two letters to the justice requesting an ajournment. Justice Boudreau said that, in contacting his office and hearing from the other lawyers that Harding was on vacation, Harding seemed "uninterested" in the hearing. Mayor Comeau told SCT that he thought the town was paying for representation in court and perhaps "we should seek other council".

The big mistakeLockeport Mayor Darian Huskilson is confidant that his council will not take kindly to the disappearance of the monies, nor to the position that they were never targeted for Team Shelburne. "I don't like to speak for council, he adds, "but I am 99% sure that they will not just walk away from this." Huskilson was at the initial meeting with provincial ministers and remembers clearly - as do all other attendees questioned - that the monies were to go to Team Shelburne for economic development. "The big mistake," adds Huskilson, "was taking this place of the province's hands in the first place. We should have made them do their job."

Frankly speakingThe positions expoused by lawyer Belliveau for SWSDA are apparently not necessarily those of the board of directors or executive. "We've never been consulted about any legal strategy on this thing," says Huskilson, who serves as treasurer for the SWSDA board. "I imagine that, in the absence of any consultation, those are the positions of Frank Anderson that were being represented in court."

Shelburne County MLA (and former Barrington municipal warden) Sterling Belliveau (no relation) admitted to being surprised at the turn of events in the courtroom. "That delegation of ministers that came down to meet with us, they told us that the funds from the Youth Centre were to be used to create an economic development fund for the county." Lawyer Belliveau, who was assisted by junior attorney Gavin Giles, said that Team Shelburne could access funds from SWSDA by presenting a project proposal to them, which might result in funding by SWSDA via their line of credit, which is guaranteed by the same municipal governments. Secret Agent?"They're asking us to make requests to them to spend money they borrow on our credit for projects which should have been paid for with our funds that they spent on letterhead and lawsuits," said warden Scott. "It's really unbelievable". The money, says Scott, was always earmarked for use by Team Shelburne members for economic development. A recent letter from former economic development minister Richard Hurlburt said, according to Scott, says that Frank Anderson and SWSDA were agents for Team Shelburne in spending the money. "It was never supposed to disappear into SWSDA's general funds," she added. Hurlburt, who issued the letter just days before leaving his post as minister, is also a partner in a Yarmouth-based real estate development business with Frank Anderson.The Bowood ConnectionIn a November 2 letter from Belliveau to Latimer, the McInness Cooper lawyer demanded for SWSDA from the Municipality a $500,000 increase in its line of credit, which it might then have to use to pursue a legal action with Bowood Corporation. Ralston MacDonnell, a frequent beneficiary of large consulting contracts from SWSDA, is the sole officer of Bowood. The tender and sale of the property was controversial, in that a second bidder claimed that his was the only bid submitted under published guidelines and that CEO Anderson gave special preference to MacDonnell. Belliveau stated also in his November 2 letter that Bowood is on the selling block, a claim MacDonnell denies. In the letter, Belliveau intimates that there are still economic development funds available, but may not be for too long if the loan guarantees are not approved soon.

"There have been more recent threats from SWSDA to sue us," says warden Scott. "It's not officially a suit, but it's about our refusing to agree to increase the line of credit."Wharf RatsIn his comments during the hearing about people being concerned whether monies might be missing from various projects or accounts, Justice Boudreau said that people are naturally wary of companies or agencies which exist on paper only and which "might get lots of money to repair a wharf and then millions go missing." Justice Boudreau is from Digby, where a recent funding scheme to repair and protect the wharf turned into what may referred to as " a disaster." In that project, Ralston MacDonnell, according to a CBC radio report, was "the president of a company hired by a non-profit groupy in Digby to operate the port. His firm has received $2 million of taxpayers money through a management contract which MacDonell says doesn't require his company to itemize or account for what it spends to anyone." Attorney Belliveau twice repeated in court that SWSDA is a "public body", funded by the government. In a separate legal action between OPI's Ed Cayer and Anderson regarding Anderson's refusal to produce his expense claims, the SWSDA CEO has consistently claimed that SWSDA is not a public body, so is not subject to freedom of information requests. This is despite rulings by the provincial freedom of information office to the contrary. That case, in which the Freedom of Information Society has intervened, may go to trial in January.Never, never happen landAll of the parties to the suit except SWSDA agreed to allow the funds to go immediately to the Team Shelburne members. "Team Shelburne wants to get its hands on that money," asserted Belliveau, "and that's never going to happen." The Justice Boudreau suggested that, since SWSDA is backed by the government, and since they seem to have spent the money in question, perhaps the government could post a surety bond of sorts to protect the assets in the future. Those familiar with the current provincial government say that such a guarantee is unlikely.

"This fiasco only proves the point I have made for years," adds Shelburne mayor Comeau, "we need our own RDA here and we need it now." Despite several requests by Team Shelburne for a meeting with The hearing was adjourned until December 6 in Yarmouth, in order for SWSDA to submit their "internal accounting" for the Team Shelburne funds and for the attorneys in the case to absorb the many documents submitted by SWSDA in the past two days. That hearing will include a cross-examination of Frank Anderson regarding assertions and claims in his affidavit which OPI's lawyer believes may be incorrect


Follow the money: The total monies possibly accruing to Team Shelburne into SWSDA bank accounts from the discharge by provincial authorities of the former Shelburne Youth Centre (Shelburne Place) include:
Monies given by province on discharge in 2004 - $ 600,000
Interest on the above (2 yrs @ 5%) 60,000
Funds from sale to Bowood 550.000
HST on sale 77,000
Interest on sale funds ($627k x 5% x 4mos) 10,440
Total $ 1,297,440

This accounting does not factor compound interest on discharge funds or legitimate accountable expenses. Team Shelburne has not received an accounting of the funds to date.
Robert Belliveau declined to be interviewed for this story. Frank Anderson and Barrington warden Louise Halliday did not return calls by press time.

http://www.shelburnecountytoday.com/