Waste, conflict-of-interest alleged at U of R-affiliated CO2 venture

A climate change initiative that's one of Saskatchewan's most prominent scientific projects has been embroiled for years in allegations of conflict of interest and financial waste, CBC has learned.

The Regina-based company known as IPAC-CO2 (the International Performance Assessment Centre for the Geologic Storage of Carbon Dioxide) was formed in 2008 to create international standards for carbon sequestration, which is the storage of carbon dioxide underground.

Millions of dollars from government and industry went into the venture, which is located at the University of Regina campus. Now a CBC investigation has discovered that some people running the company were in an apparent conflict of interest.

Among those who were asking questions about IPAC was Carmen Dybwad, who became CEO of the company in 2010.

She was excited to start at the project that's right at the heart of the Saskatchewan government's environmental plan.

'Emotionally and physically upset'

However, when Dybwad started reviewing the company's books, her excitement turned to shock.

"I was astounded and I was emotionally and physically upset," Dybwad said. "Like, literally on the verge of throwing up."

Dybwad discovered IPAC was spending more than 60 percent of its budget on its computer system, but there was a question mark over the actual services being delivered.

"We could not figure out for the life of us what we were paying for. There was no set of deliverables," she said.

Was Malcolm in the middle?

One of Saskatchewan's best known scientists says through his lawyer that there was no conflict of interest in the case of IPAC-CO2 and CVI.

Malcolm Wilson, currently the CEO of the Petroleum Technology Research Centre, at one time was linked with both IPAC and CVI.

But according to his lawyer, David Brundige, there was never any overlap between Wilson's involvement in the two companies.

Government documents showthat as early as March, 2008, Wilson, on behalf of the University of Regina, asked the Government of Saskatchewan for $100,000 to fund CVI.

Later that year, on August 27, CVI was incorporated federally and at that time Wilson joined its board as a director.

Wilson issued shares

He was also issued 100 class A common shares in CVI. Shortly after joining CVI's board, Wilson "reconsidered his position" and resigned from the board effective Aug. 29, 2008, the lawyer said.

Then, on March 18, 2009, Wilson transferred his shares and ended his involvement with CVI, according to his lawyer.

"Please note that Dr. Wilson has never received any dividends, financial benefits or income from CVI, nor has he participated in any meetings or been affiliated with the company since August 29th 2008," Brundige said.

It was more than a year later, in September, 2009, that Wilson joined the board of IPAC, and was appointed acting CEO of the organization, and therefore there was no conflict of interest, Brundige said.

Industry Canada records

However some of the dates provided by Wilson's lawyer appear to contradict documents obtained by CBC.According to Industry Canada records, Wilson resigned from CVI on April 3, 2009, with his resignation backdated to Aug, 29, 2008.

In December 2008, it appears Wilson continued to represent himself as a director of CVI. Wilson is the author of a 44-page document entitled Final Report: Climate Ventures, dated Dec. 20, 2008.

It's a Climate Ventures business plan he prepared for the government of Saskatchewan and other "stakeholders".

The report highlights CVIs six-person "management team" which includes Wilson and Ian Bailey, who are identified as directors of the firm.

IPAC announced in news release

As for Wilson's involvement with IPAC, that appears to go back to at least November 6, 2008 the date the University of Regina, the Government of Saskatchewan and Royal Dutch Shellannounced the formation of IPACand referred to Wilson as its director.

CBC asked to speak with Wilson, but was told he was too busy to do an interview.

IPAC's information technology provider was another company, Climate Ventures Inc. (CVI), run by businessman Henry Jaffe.

Deal called 'handshake agreement'

The two men running IPAC in its startup phaseMalcolm Wilson and Ian Baileyalso worked at the university. Wilson was director of the office of energy and environment, while Bailey was the director of the university-industry liaison office.

They asked CVI to run IPACs computersa sole-sourced agreement where there was no competitive bidding and no written contract.

"I guess you would probably characterize it as sort of a handshake agreement," Dybwad said.

Then Dybwad made her most troubling discovery: not only were Wilson and Bailey managing IPAC, they were also founding directors of CVI and were on its board for months.

The web of relationships came to the attention of the government of Saskatchewan.

Province takes a look

When CBC asked Donna Harpauerthe cabinet minister responsible for the province's portion of the IPAC fundingabout how it looked, she said: "It's a conflict of interest."

Harpauer says when the province and IPAC's other partnerShell Canadasaw that conflict, they took immediate action.

"Both entities discontinued the funding obviously because they didn't agree with what was happening under the management of the U of R," she said.

Harpauer says the government requested a report on the relationship between IPAC-CO2 and CVI.After thereportwas done,funding was restored.

Harpauer says the government is disappointed with how all of this unfolded.

"We were maybe overly confident that the U of R was a very great partner to have and manage this. But obviously it was mismanaged," she said.

Procedures tightened up, U of R says

The University of Regina admits that it made some mistakes.

"We found in our review we did some things that were a little loose and we've tightened up policies and procedures," said Barb Pollock, the U of R's vice-president of external relations.

CBC News was unable to interview Ian Bailey, who is on long-term disability.

However, Malcolm Wilson's lawyer did send an email, saying Wilson is heading off on holidays and is too busy to do an interview.

His lawyer insists that Wilson did not profit at all from his role at CVI and there was no conflict of interest.

Accounting firm brought in

Eventually, a forensic investigation was ordered to look into how taxpayers money was managed in the IPAC case.

The IPAC board hired the accounting firm Meyers Norris Penny to see if IPAC delivered value for money.

According to the board, that review shows the money was well managed. However, the board says that for confidentiality reasons, it's not in IPAC's interest to make that report public.