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Sweeping changes at NPC may impact maid lease

Niagara Falls Repoerter

Decemner 14, 2010

By Frank Parlato Jr.

Two years ago, the Niagara Falls Reporter started digging into secret lease arrangements between the Niagara Parks Commission (NPC) of Ontario and Lewiston businessman James Glynn for his Maid of the Mist boat tours.

A lot has changed since then.

For 40 years, Glynn's boats launched from both sides of the Niagara on parkland owned by Ontario and New York. The public never knew what they were getting for leases on park property.

As the Reporter explored details of Glynn's leases, it unintentionally excavated shadowy business dealings revealing how the NPC -- a 10-12 member, politically-appointed board -- oversees operations on the 4,200 acres of public land, with attractions, golf courses, restaurants and concessions, in and around Niagara Falls, entrusted to its "stewardship."

All deals, the Reporter learned, to the tune of $87 million per year, are done in secret -- a patent recipe for corruption.

Along the way, the Reporter exhumed long-buried stories of how commissioners, 50 years ago, sold parkland to their friends and bought it back for pennies, and how Legends Golf Course came in over-budget -- as commissioners lined up "friends" who got winning (or low) bids -- and, as if it were planned, got millions more using change orders.

If the Reporter could tunnel deep into history, it would find that the circumstances surrounding the secret lease arrangements for Glynn were not much different from hundreds of others in the NPC's past.

Back in 2007, Ripley Entertainment Inc. thought it might be able to provide a better tour than Glynn. Instead of giving Ripley a chance to bid, commissioners quietly stalled Ripley while they drafted a new lease for Glynn two years ahead of time. Then they secretly renewed Glynn's lease for 25 years, reducing his rent from 15 percent of boat sales to a sliding scale that bottomed out at 5.5 percent.

One commissioner, Bob Gale, like every commissioner, signed the secret oath of confidentiality. He had every reason to support Glynn. Gale sold diesel for Glynn's boats.

While he stood to make hundreds of thousands from Glynn by keeping his mouth shut, the parks were going to lose about $100 million over the term of the new Glynn lease.

At first, nobody listened to Gale's complaints about this "dirty deal." NPC officials Archie Katzman, John Kernahan and Jim Williams told the press they made a honey of a deal, but they could not reveal the terms. They denigrated Gale. They claimed they did not know anything about Ripley's interest. They got Gale removed from the board.

The Reporter got hold of the secret lease and published it. It was a honey of a deal -- for Glynn.

From there, things unraveled fast.

The Reporter found that in order for Glynn to get his New York lease, Bob Brooker of the NPC apparently sent Albany an invalid Ontario lease. Glynn's New York lease was based on conditions in his Canadian lease that did not exist. Albany officials approved a 40-year, no-bid New York lease with a massive rent reduction for Glynn -- based, it appears, on a phony Canadian lease.

The Reporter found that Glynn did not own the name "Maid of the Mist," which has been used for falls' boat rides since 1846. The true lease states Glynn has "no right or interest in" the name.

NPC commissioners went on record falsely claiming Glynn owned the name. For reasons that are somewhat unclear, they wanted to abandon Canada's historic public domain name to help Glynn.

The Reporter also uncovered, as early as March 2009, that NPC Vice Chairman Archie Katzman got wine contracts for one son, and for his other son the phone contract at the NPC. According to sources, one man collected a check for $5,000 on a general contract for services, apparently without doing any work whatsoever.

And the $40 million Table Rock improvement, with the virtual reality ride "Fury," went to commissioners' friends. The Fury did so poorly, sources said, that projections used to justify the expenditure were off by 99 percent.

In time, the Toronto Globe and Mail started its own coverage. Other Canadian papers followed.

Milestones occurred:

  • Integrity Commissioner Lynn Morrison ordered a forensic investigation by the Ministry of Finance, which, in turn, retained a private fraud investigation firm, BMCI Consulting Inc., of Ottawa, to conduct a Maid of the Mist probe. The audit suggested a broader investigation was necessary.
  • Tourism Minister Monique Smith ordered audits of governance and procurement at Niagara Parks. Smith tried to conceal the results. The Globe and Mail got hold of the report. It cited "serious gaps in policies, opaque decision-making and an image as an 'old boys' club.'"
  • Glynn's Maid of the Mist lease was canceled by the minister of Tourism and ordered out to competitive bidding, from a secret rent reduction for Glynn to possibly $100 million more in rent for the NPC.
  • Commission meetings were opened to the public for the first time in 125 years.
  • An Ontario Internal Audit Division review is in progress, focusing on single-source contracts like the Maid of the Mist and NPC expenditures.
  • Everyone who secretly supported Glynn was fired or resigned abruptly. The NPC house-cleaning included the chairman and general manager, who both resigned; four commissioners, along with the NPC business development director, who were fired; and the remaining four members of the board -- representing Regional Niagara, Fort Erie, Niagara Falls and Niagara-on-the-Lake -- were ordered to be "replaced" by "new faces," completing a 100 percent change in the old NPC board.

The Reporter's work may have amounted to nothing had it not been for William Windsor of Atlanta. Windsor tried to bid on the Maid of the Mist and was chastised by GM John Kernahan as being "full of hot air."

Windsor started digging and reporting. Over two years, he wrote an astonishing 500,000 words for his e-publication Rumour Control, leading the charge for the Maid lease cancellation and Kernahan's departure from the NPC.

Tremendous credit also belongs to Globe and Mail reporter Anthony Reinhart, whose investigative efforts validated the scandal and made it national news.

Reinhart showed Canada the not-too-pretty picture of backroom deals, botched projects, distorted construction bids and a lack of policies and procedures at the NPC.

Among his findings:

  • $500,000 in NPC funds was paid to a magazine publisher in an untendered contract.
  • NPC official Joel Noden spent $395,000 on travel and entertainment between 2006 and 2009. Noden's boss, Kernahan, blamed it on NPC's corporate services director, who in turn denied he had knowledge of it.
  • Fay Booker, the newly appointed, "sanitized" chairwoman of the NPC told the Globe, "So did (Kernahan) just say he shirked his responsibilities?"
  • Allegations of financial impropriety at the Niagara Parks Commission reached the Ontario cabinet back in 2005, possibly earlier. Nothing was done. Apparently the Tourism Ministry investigated its own agency.
  • A suspected forgery where an employee allegedly signed Noden's name to a contract to stage a $200,000 concert in Niagara Falls. The concert was canceled. The NPC reportedly lost $40,000.
  • NPC Vice Chairman Katzman, a former bankrupt, accepted an interest-free mortgage from "friend" Donald Ward, who went on to win multimillion-dollar building contracts at Niagara Parks. Ward's son Rob was named golf pro at the commission-owned Whirlpool Golf Course, as Katzman headed the golf committee.

Lately, news stories emerge almost daily as members of Ontario's Parliament hotly criticize the NPC and the Liberal Party. "Lavish spending, loosey-goosey financial controls, questionable links with contractors: If ever a situation cried out for the Auditor-General, this is it," said New Democrat Party Leader Andrea Horwath.

NDP Peter Kormos asked Premier Dalton McGuinty to get a full-scale investigation going, "maybe even the police," to look into allegations of improper deals.

MPP Ted Arnott said of the Liberals, "After more than seven years in office, the rot has set in, and the rot is theirs." Windsor agreed.

"I sent at least 21 letters to Premier McGuinty and at least 16 to the entire Executive Council of Ontario in 2009 alone!" Windsor said. "The simple truth is that the powers-that-be in Ontario ignored it."

While much has changed, one troubling fact remains: The Request for Proposals (RFP) on the Maid of the Mist lease, designed by the now-fired allegedly Glynn-biased team, is going forward without much change and even less transparency.

Last week, the NPC -- with its brand new faces -- put the "final strokes" on what was largely a RFP orchestrated by the pro-Glynn forces.

"(The NPC) should start the RFP over with all bias eliminated from the process," Windsor said.

If it stands, the bidding, which is to be completed in mid-January, is being done in secret, without the public knowing who is bidding or what it is going to get from boat tour operators on public land.



  Copyright © 2008 Frank Parlato Jr.