Sifting Sio Silica sands for answers, concerns

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This article was published 15/01/2024 (655 days ago), so information in it may no longer be current.

The Sio Silica plot thickens.

Just five weeks after a new conflict of interest law was enacted in Manitoba, a complaint has been made by NDP caucus chair Mike Moyes against Progressive Conservative MLA Jeff Wharton (Red River North) and former party leader Heather Stefanson (Tuxedo).

The complaint alleges, following their defeat in October’s provincial election, then-economic development minister Wharton and first minister Stefanson pressured cabinet colleagues in the outgoing Tory government to approve an environmental licence for Sio Silica, an Alberta-based company seeking to extract millions of tonnes of quartz silica from deposits some 50 kilometres east of Winnipeg.

Any effort to approve a licence for a controversial project during the period of transition violates a number of the tenets of the “caretaker convention” — the parliamentary tradition that limits what any outgoing government can do before the new government takes over.

However, the impending investigation by conflict of interest commissioner Jeffrey Schnoor will inevitably open up other questions that go beyond the caretaker convention.

In particular, whether anyone associated with the former PC government stood to gain by approving the Sio Silica licence?

To date, no one has produced any evidence that shows a direct line of benefit between the proposed mining project and anyone within the former PC government. That does not mean there are not concerns.

Around the same time Wharton was allegedly pushing for approval, the company was putting the finishing touches on a merger and initial public offering with Houston-based Pyrophyte Acquisitions Corp. that is wholly dependent on getting a licence to mine Manitoba silica.

Documents filed with the U.S. Securities Exchange Commission clearly explain Sio Silica has not yet obtained an extraction licence from Manitoba. However, a Nov. 13 news release confirming the merger and IPO strongly implies the issue had been settled.

“Sio has approximately 15.2 billion tonnes of in-situ high-purity silica… and intends to initiate a mining plan that ensures a comprehensive and active environmental stewardship over the years to come,” the news release states.

There are also red flags surrounding Pyrophyte chairman and chief executive officer Bernard J. Duroc-Danner, an experienced executive with a long and somewhat colourful history with the SEC.

Duroc-Danner was previously chairman and CEO of Weatherford International PLC, a Swiss provider of oil and gas services operating in more than 100 countries.

In 2013, Weatherford was fined more than US$250 million by the SEC for violations of the Foreign Corrupt Practices Act. The specific charges included bribery and kickbacks in the Middle East and Africa, and repeated breaches of economic sanctions on Iran and three other countries.

At the time, it was the largest settlement for a sanctions violation outside the banking industry.

The same year, Duroc-Danner was again in the news, this time for understating his compensation by tens of millions of dollars. In 2016, the company was fined another $140 million for deceptive income tax accounting.

Duroc-Danner voluntarily stepped down in 2016.

Now, Duroc-Danner and his new corporate entity have an inside track on what is considered to be potentially one of the most significant quartz silica mining operations in North America.

Given this is the first formal complaint to be brought under Manitoba’s new conflict of interest law, it’s unclear exactly where the investigation will go.

In broad terms, the act is meant to determine whether member of the legislative assembly “exercises an official power, duty or function that provides an opportunity to further their private interests or those of their family or to improperly further another person’s private interests.”

Which is to say, Schnoor does not have to prove Wharton, Stefanson or any other member of the former PC government stood to benefit from trying to push through a licence for Sio Silica. He need only establish their actions would have benefited of some other private interest.

That is where the merger between Sio Silica and Pyrophyte, and their possible IPO, becomes a major point of interest.

Although there is no evidence Wharton stood to benefit from the the issuance of a licence, Sio Silica and Pyrophyte certainly would have.

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Although Wharton continues to deny he has done anything wrong, he is also refusing to answer any additional questions.

That’s too bad, because it would be good to know if he was in touch with Sio Silica leadership during the period he was pushing for a environmental licence, and whether he knew Sio Silica was seeking a merger and IPO with a American firm that was fully dependant on said licence.

The answers to those questions could potentially raise a number of alarming concerns.

Can Manitoba’s new conflict of interest law get to the bottom of exactly what was going on here? Only time and the diligent efforts of the conflict of interest commissioner will tell.

dan.lett@winnipegfreepress.com

Dan Lett
Columnist

Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986.  Read more about Dan.

Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.