June 20, 2019

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MPI board can refuse to implement government orders

The Pallister government has every right to tell a Crown corporation what to do – but it must be publicly transparent in doing so.

And if the government directs a Crown corporation to do something that is not in the company's best interests, directors are obligated to take a stand.

According to a legal opinion solicited by the board of Manitoba Public Insurance, and obtained by the Free Press, legislation passed two years ago by the Progressive Conservatives gives the government broad powers to dictate policy to Crown corporations, but it must be open about it.

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The Pallister government has every right to tell a Crown corporation what to do – but it must be publicly transparent in doing so.

And if the government directs a Crown corporation to do something that is not in the company's best interests, directors are obligated to take a stand.

According to a legal opinion solicited by the board of Manitoba Public Insurance, and obtained by the Free Press, legislation passed two years ago by the Progressive Conservatives gives the government broad powers to dictate policy to Crown corporations, but it must be open about it.

Premier Brian Pallister's Progressive Conservatives vowed not to interfere with the operations of Crown corporations when they were sworn into office in May 2016.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS FILES

Premier Brian Pallister's Progressive Conservatives vowed not to interfere with the operations of Crown corporations when they were sworn into office in May 2016.

Much in the way the Trudeau government is legally bound to be transparent if the attorney general were to order the director of public prosecutions to secure a deferred prosecution agreement with SNC-Lavalin, provincial law requires the Pallister government to make directives to a Crown corporation public in Manitoba.

This legal requirement gives the MPI board of directors at least one advantage in its dispute with the Pallister government over the company's bid to deliver services, such as driver's licence and auto insurance renewals, online. MPI's online push is running into resistance from the organization representing the province's insurance brokers. And it appears that the brokers have the ear of a premier, who made his fortune in the insurance and wealth management fields.

So far, there has been no ministerial directive to block MPI's online plans, a spokesman for Crown Services Minister Colleen Mayer confirmed in an email on Friday. If there had been, it would have to be made public within 30 days, according to the 2017 Crown Corporations Governance and Accountability Act.

"The fundamental limitation on government control over MPI is the requirement for transparency," according to the 39-page legal opinion the corporation received from the Winnipeg law firm Thompson Dorfman Sweatman.

The Free Press reported Thursday that the MPI board took the extraordinary step of soliciting the legal opinion when directors faced pushback from the Pallister government over its service delivery modernization plans. A source said the board is so concerned that there could be mass resignations from the Progressive Conservative-apppointed body if the situation is not resolved.

Polly Craik had her term cut short as chair of Manitoba Liquor & Lotteries after she objected to government issuing policy directives directly to MLL management.

RUTH BONNEVILLE / WINNIPEG FREE PRESS FILES

Polly Craik had her term cut short as chair of Manitoba Liquor & Lotteries after she objected to government issuing policy directives directly to MLL management.

The Progressive Conservatives vowed not to interfere with the operations of Crown corporations when they were sworn into office in May 2016. That same month, Pallister's first Crown Services minister, Ron Schuler, said, "The political interference in the Crowns has to stop."

However, PC political appointee Polly Craik had her term cut short as chair of Manitoba Liquor & Lotteries after she objected to government issuing policy directives directly to MLL management, bypassing the board of directors. And, the current board of MPI is on a collision course with the government over informal pressure directors say they're receiving to alter policies that both management and the board are in agreement with.

NDP Leader Wab Kinew says the situation is reminiscent of the pressure senior members of Prime Minister Justin Trudeau's administration applied to former justice minister Jody Wilson-Rabould.

"As we've seen in that federal case, just because there's nothing in writing doesn't mean there wasn't pressure applied there. You could still have a very similar situation of inappropriate pressure being applied in this example as well," Kinew said.

In an appearance before the Public Utilities Board last fall, MPI president and CEO Benjamin Graham said the corporation didn't offer any transactions online. And he said that needed to change.

Manitoba Public Insurance's president and CEO Benjamin Graham</p>

Manitoba Public Insurance's president and CEO Benjamin Graham

Graham said 80 per cent of MPI clients would prefer to go online for simple transactions, such as informing the corporation of a change in address. Seventy-five per cent would be comfortable renewing their auto-insurance policies online, while 35 per cent would like to be able to purchase a new policy this way.

However, an official with the Insurance Brokers Association of Manitoba said insurance purchases are more complex than they may appear on the surface. His group is arguing that even online transactions should go through a broker.

Meanwhile, according to the opinion obtained by the MPI board, there is no legal requirement that the directives and instructions from government be in the best interests of a Crown corporation. On the other hand, it is "solely the responsibility" of the board of directors to determine what is in the best interests of the corporation.

"Accordingly, the board of directors must proceed with great caution when implementing directives or instructions issued by government which it feels are not in the best interests of the corporation," the legal opinion says.

If directors run up against this issue, they should consult with government representatives and/or obtain legal advice on the matter.

If after exhausting all options the board determines that the directive from government conflicts with the board's duties to act in the corporation's best interests it "may have no alternative but to refuse to implement the decision," according to the legal opinion.

In carrying out their legal duties, It may not be good enough for directors pressed to act contrary to the best interests of a Crown corporation to have their dissent recorded in the minutes of a meeting, the opinion said.

"In some situations the director may have no alternative but to resign."

larry.kusch@freepress.mb.ca

Larry Kusch

Larry Kusch
Legislature Reporter

Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.

Read full biography

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