Tuesday, January 5, 2010

Who says no, when no needs to be said?

Buyers, when buying, love simple solutions. Sellers, when selling, are motivated oppositely because complex arrangements are so much more rewarding.

The concepts are indisputable. If you construct a tiny shed, the cost is small. If instead, you build a voluminous warehouse, costs rise dramatically. Which is OK, but only if that's what you need.

I had a vehicle rejected by AirCare for an exhaust difficulty. A national brand shop estimated $800 to repair so I drove to a small garage for a comparison. Five minutes and $20 later, I returned to AirCare for a pass. The minor weld fix still held three years later.

In everyday life, we make financial decisions regularly and, through focus on self-interest, they generally work out. But, when everyone involved in a project gains by escalating size and complexity, who manages the limits? Who says no, when no needs to be said?

Consider the budget for the 2010 Olympic security units. Originally $175 million, insiders knew this was wildly inaccurate but kept quiet for years. Even the 2009 estimate of $900 million was plastic with details hidden from public analysis. Will the amount escalate further? It already has and, with no effective controls in place and no willingness to deny any whim, it will grow more. There are no means of control. The kids are in the candy store without constraints.

In private business, the shareholders and financiers set limits and take concomitant risks. In the public sector, the issues of responsibility are less certain; risks, even more abstruse. Voters exercise theoretical control but infrequently and without precision.

As British Columbians learned in 2009, the party in power controls the flow of information and may feel no obligation to honest disclosure. That difficulty might be offset were there a vigorous opposition and an inquiring news media, both able to freely access information. These elements are not present in British Columbia so the BC Liberal Government suppresses accountability.

Transactions worth tens of billions, such as the private power commitments, are negotiated behind closed doors between current and former associates who can flip from buyer to seller on a whim. Detailed terms of the deals remain secret. Thousand year leases, agencies, crown corporations, P3s, publicly owned private companies and other vehicles of evasion are used to shield financial arrangements from public view.

Public tenders are used to buy paper clips but not hospitals, bridges and highways worth billions. Instead, Requests for Proposals are issued to friends and deals awarded without competition. Terms are secret.

How are citizens of British Columbia protected from massive financial fraud? Simple. We are not protected. Years ago, when I was learning financial systems, internal control and audit principles, one thing was clear. When opportunities for fraud are present without likelihood of timely discovery, it will occur. That will happen when small sums are at stake; it is even more likely when large sums are at stake.

So, who protects the public interest? MLAs are not allowed to speak except on behalf of approved party policies. News reporters are co-opted and rewarded for cooperation. Publications and broadcasters see lucrative government advertising as due compensation for friendly coverage.

And, of course, the bureaucracy expands to meet the needs of the expanding bureaucracy. Salaries escalate, benefits increase and the ultimate rewards - multiple dipping consulting contracts or employment as a key lobbyist - accrue to the most faithful.

Corruption expands to meet the needs of the corrupt.
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4 comments:

  1. Norman, this strikes very closely to something that I have been asking of late. And that is, we are told nightly about a Project or Service that the Provincial Government has just approved, and the cost will be 400 billion, or 3 million, or 76 kazillion, take your pick. And that' s it!!! My immediate response is "says who"?????? But the mere announcement seems suffice, and all I can do is wonder...........
    And then I remind myself.......... follow the money.

    Gary L.

    Cheers

    ReplyDelete
  2. Norman:
    As a former journalist in this province, I subscribe to the "I may not agree with what you say, but will fight to the death your right to say it" philosophy. So, you have the right to say "News reporters are co-opted and rewarded for cooperation" however I completely disagree.
    I have worked for all three national TV news networks, from Nain, Labrador to Vancouver Island. If there was co-opting and rewarding going on, it's news to me and my many colleagues over the years. Yes, I was employed by CanWest and other big corporations, but I have NEVER been told what to write, how to write it, or was rewarded for broadcasting a suggested or implied company position. Your suggestion is pure nonsense, often foisted on an uninformed public who is unaware of the journalistic principles of many of my former colleagues who still practice this craft in BC and around Canada. Can they do more? Of course they can and I continue to push reporters and producers to dig deeper, ask better questions and think more critically. Usually we hear of this media-bashing from the less-informed and contumacious voices in our society, and we let them sing whatever ranting song they want. I enjoy your blogs. I don't want to put you in that category.
    Mike Chisholm.

    ReplyDelete
  3. Thanks Mike for the comment. I realize that many talented, honestly motivated media members contribute to our information streams but it is naive to suggest that each has an open hand, uninfluenced by non-journalistic factors. We know that ownership influences content, not by mandating specific material, but by hiring, promotion and assignment policies. Not to mention, the control exercised by budget allocations. For example, a thorough examination of BC Rail land sales, tracing from public ownership to final private holdings, would take months of detailed legwork. A reporter can hardly decide to pursue a possible scandal without full backing of the employer.

    Bill Good likes to repeat that no one tells him what to say and what to cover. But, he is well aware of what is expected. I've said before that Rafe Mair knows exactly why he doesn't work much in main stream media.

    One person made a comment here a while ago that illustrates the influence of hiring practices:
    " . . . the presence of Fraserites (former FI employees) on the editorial boards of the Vancouver Sun and Calgary and Edmonton daily newspapers ensures a steady stream of pro-free-markets propaganda."

    What do you think of a commentator's spouse employed by those being covered? Or, how about a political reporter earning fees from industry participants who are reliant on government policy? Or, even worse, a reporter covering the provincial government that pays him fees for service?

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  4. Mr. C. should check out the story of Reuters news agency killing an investigation into a billionaire hedge fund manager after he complained. Reuters, by the way, is controlled by Canada's Thompson Family.

    http://gawker.com/5442982/reuters-chief-accused-of-caving-to-hedge-fund-story-wasnt-bad--could-have-run

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