RestoreCSA Scores a Victory
December 14th, 2014
“We’re going for drinks at Harbour Sixty, just casual, nothing business. You two should come along.” These were board members of the Canadian Standards Association (CSA) and by this hour they needed the drinks. It was late and the two with the invite had just read the November report from Gowlings, their legal counsel. And it was jaw-dropping. The CSA is heavily exposed on a wide variety of issues, some in areas of criminal law, and all the legal remedies on tap are unsavoury in varying degrees. “We’re in the Enron saga,” said one, “didn’t they have Charlie’s?” That’s Charlie’s Bar in Houston, and yes, Enron executives had more than a few casual, non-business yet fully business meetings there. But Harbour Sixty wasn’t a frequent haunt for CSA.
As it turned out, the “casual, nothing business” meeting took place in a private room, had a typed agenda and the attendees comprised a voting quorum of the board. Ash Sahi, the CEO, wasn’t informed, and this wasn’t the first quiet meeting.
“So, what to do with Sahi.” That was the discussion. It was clear to some on the board, even by the summer of 2014, that Sahi had to go. He had bungled file after file, and the board had learned in their dealings with him that his capabilities are outpaced by his charm. That is, he shows well provided you don’t get to know him. If you do get to know him, you soon know how much he doesn’t know and how little he cares to find out. And so, over white linen the black deed was done.
That’s one version of the story, but RestoreCSA has heard more than one account of Sahi’s firing. You see, while we’re pleased with our inside sources, we don’t have any informants on the board, at least not yet anyway. So the stories coming out of CSA’s headquarters are informed but not authoritatively so, the specifics of how the firing happened are still foggy.
For instance, another version of the story holds that the offsite meeting wasn’t at Harbour Sixty, it was at Four Seasons Toronto. Not that it matters much, save for the price of hors d’oeuvres. Still another has Sahi “summoned” to that offsite meeting. An early report agreed with other sources that the boardroom discussion was notably “boisterous,” but they claim that it took place at CSA headquarters.
The immediate cause of his firing is also unclear. We are lately advised that CSA’s board issued an instruction to Sahi regarding the RestoreCSA file and that he arrogantly refused the board’s instruction, hence the firing. We are elsewhere told that the board regarded his handling of RestoreCSA as inept and obstinate (and we agree) and they began to see Sahi as both an impediment to resolution with us and to recovery for them. Another option is that the board increasingly saw Sahi as dirty. Given the CSA’s mounting legal problems and Sahi’s intimate involvement in generating them, the board thought it best to ditch the dullard and move on.
For all the rumours, here’s what we do know. The CSA board is split, badly split. There’s a lot of deadwood on their board, there are some board members whose only qualification for governance is being friends with the right people and cheerleading appropriately. There’s a natural split between those who perceive their dangers and those who don’t, and there’s an equally natural resentment of each side, by each other side.
We also know that the board is anxious about the firing, given the turbulence at CSA, hence the spin that Sahi is “retiring” rather than being sacked. Multiple sources affirm that Ash Sahi was indeed fired, but CSA can’t legally fire “with cause” without courting more trouble in court. And its unclear how much transition time the board will tolerate.
We know that the board had become less comfortable with Sahi as they observed his performance on the RestoreCSA file. They were badly shaken when advised of the prospect of criminal investigations and prosecutions and their alarm was further heightened by the presentations of their outside legal counsel. The board was advised early in 2014 that until RestoreCSA’s U.K. research unearthed the record of CSA’s founding, CSA executives genuinely didn’t know that their “company” was legally an agency of the Federal Government. In consequence, the board was reeling in the knowledge that the fiduciary duties for the board of a government agency are rather different from those of a private company, and this detail brings its own liabilities quite personally to their doorstep.
Compounding Sahi’s governance problems, we know that CSA’s board was mightily miffed that Sahi launched a lawsuit against P.S. Knight Co. Ltd. (owners of RestoreCSA) without any due diligence whatsoever. Was that a smart move, do you think? And then there’s the CSA’s basis for their lawsuit, that they privately own public laws merely for having lobbied for them. The fact that thousands of companies lobby for changes in law didn’t seem to have occurred to Ash Sahi. The precedents of private ownership of public law are unconscionable in a democratic society, yet Sahi didn’t possess the discernment to have noticed. The board also knows that however illegitimate their lawsuit may be, the notion behind that lawsuit, that of privately owning the law, is also the basis for the entire CSA business model. So he started a lawsuit whose foundation is unsupportable, whose success is impossible, and whose inevitable loss will undermine the entire CSA organization.
The board of directors concluded that Ash Sahi is the cause of a lot of CSA’s problems rather than the solution to them, and that he lacks the talent and discernment and the temperament to clean up these many messes of his creation.
Then there’s the big question. What is Industry Canada doing behind the scenes? We know that CSA has worked to scrub its history of anything incriminating, even to the point of deleting entire employment histories of certain of its leadership. Even Sahi himself, formerly the Director of Industry and Trade at Industry Canada, has deleted any mention of his Federal Government history from his CV. On his authority, the CSA even destroyed the news release record of Sahi’s original hire from the CSA website. Why? Well, they deleted the record because it contained this line; Ash Sahi has “held senior level positions in the Federal Government as a Special Advisor to the Privy Council and [as] Director of Industry and Trade.” And who wrote that bio? Why, our good friend Anthony Toderian wrote it, and now regrets it. See why we like this guy so much?
Industry Canada knows that the CSA is still a government agency but they don’t dare admit it. The civil servants at Industry Canada definitely don’t want the responsibility for all that CSA’s been outed for. Its in their interest to maintain the perception of distance between their offices and those of their delinquent agency. But its a safe bet that the civil service interest in self preservation trumped their desire to protect one of their own and, by the end of the summer, they were pushing their minions on the CSA board to remove Sahi from the office.
One of the lessons of the Enron story is how quickly a house of cards can fall. The whole edifice appears quite solid just before collapsing. The President of Standards, Ms Bonnie Rose, also exited CSA, and she was responsible for the RestoreCSA file before Sahi took it over. There was no announcement when she left, Bonnie just disappeared from CSA records, like the Soviets used to airbrush dissident leaders out of existence. Bonnie left without another job to go to, and that’s revealing. It seems that she wanted out before the cards started falling. Lou Pai was never charged for anything he did at Enron, but he had left the company six months before Enron collapsed. Bonnie left three months ago.
Its also revealing that CSA announced Sahi’s departure in the middle of the afternoon on a Wednesday, especially given that CSA has lost two of its most senior executives in the last four months. These losses are suggestive, there’s a current beneath the surface. To bury the story, the Sahi announcement should have been released late on a Friday, ideally during the Christmas holidays. Announcing mid-day, in mid-week, after the recent loss of Bonnie Rose, suggests that the board’s Sahi deliberations had culminated awfully quickly.
Its entertaining to note that CSA’s announcement to the media was handled by Allison Hawkins of Corporate Affairs, rather than Anthony Toderian of Media Relations. Have they lost their confidence in Toderian too? Can’t imagine why.
Alright, so the CSA turfed the small man with big heels, what happens next? Well, they need to find a replacement CEO fairly quickly. Typically, a C level search takes at least four months and, given what they’re prepping for, they don’t have that kind of time. Instead, they are likely to appoint an interim CEO, probably from outside the company, someone who isn’t compromised by CSA conduct and therefore at least notionally has the latitude to make changes. The interim CEO may be a Stephen Cooper-like figure, a contracted turn-around specialist. More likely however, the CSA board will want someone to appear to make major changes without actually causing any. And that brings us back to Industry Canada.
The Federal Government is keen on stability, especially in election years. The civil service, the real power in government, is keen on keeping their privilege and their playpens untroubled by taxpayer meddling. In this context, and for some time now, Industry Canada has engaged its influence to ensure that absolutely nothing changes at CSA. The Minister of Industry, and indeed the entire Conservative Government, has maintained a deliberate unawareness of CSA actions on their watch. When the trial begins, or when other agencies start taking action, Industry Canada’s inaction will be altered. When cornered, we believe that they’ll modify the CSA’s government charter to appear to change the reporting relationship for PR purposes, but will do so in such a way as to avoid actually changing the reporting relationship. So, the image of change with status-quo substance.
The Government and the CSA are united both in desiring to avoid accountability for CSA actions and in working to protect the crooked status-quo. The key then, for CSA anyway, is to find a new CEO with the appearance of dynamism, intelligence and integrity, an agent of change, without in practice being any of these things. They want another civil service cog, a Fellow Traveller, and someone willing to drink from a poisoned chalice. Oscar Jensen perhaps?
Regardless of their next moves, their last move on Sahi is a big victory for RestoreCSA. After months of pressure, dozens of articles, meetings with whistleblowers and innumerable quiet coffees with all sorts of people, we have in Sahi’s firing a major achievement, a critical milestone on the path to recovering the CSA as an honest regulator in the service of the Canadian public. The respectable agency that it once was, it will be again.