Fired employee was not whistle-blower, says ASC

The Alberta Securities Commission said last week it can't be accused of firing a whistle-blower because it does not know who complained that there were improprieties at the provincial agency.

Commission lawyer Brett Code said Grahame Newton, the head of administrative services at ASC, was fired for cause and not for raising concerns about enforcement practices and the working environment at the offices of the securities regulator.

Code said Newton was dismissed because he tried to block a KPMG computer systems audit and later admitted that he had intercepted e-mails and passed them on to part-time commissioners who adjudicate Alberta Securities Act violations.

"Mr. Newton responded unco-operatively and ... somewhat belligerently," Code said. "His responsibility as a director was to assist KPMG in undertaking the investigation into the security and the confidentiality of the information system.

"I'm told that rather than do that, he did the opposite," Code said.

"He tried to stop the investigation and so, basically, refused to fulfil his duties."

Code denied allegations by Opposition Liberal Leader Kevin Taft that the ASC management was on a witch hunt to find out who had complained anonymously that their bosses were interfering with securities investigations.

"Whatever Mr. Taft is saying, we don't have the information to make that connection," Code said.

"This person is not known to me or anyone else involved as a whistle-blower.

"He didn't admit to that. He didn't tell them: 'Listen, I am one of the whistle-blowers. You can't touch me.' " A recent amendment to the Criminal Code makes it an offence - punishable by up to five years in prison - to try to muzzle or retaliate against whistle-blowers.

Code said the ASC can't be accused of doing that.

"If the violation requires that we're punishing or penalizing someone for whistle-blowing, I don't think that's what the commissioners have done."

Newton said last week he received a letter from the ASC advising him that he had been terminated.

He has not said why he was let go. He said he will seek legal advice before taking any action.

Investor advocate Diane Urquhart said last week that the firing of Newton in the midst of the turmoil at the securities commission will not go over well with the investing public.

"If in fact someone has had a remedial termination because of an allegation of providing information ... it's unacceptable and the investing public should be very concerned," she said.

Urquhart was skeptical of the timing of the KPMG audit.

"It's entirely reasonable for a forensic audit to occur ... but right in the middle of a human-resources fiasco makes no sense from a management point of view. It's oil on a fire."

Newton was fired the same day Alberta Finance Minister Shirley McClellan told the legislature there was no witch hunt under way.

The firing appeared to surprise McClellan.

"The minister is very concerned about what happened and she is currently considering her options," said Tracy Balash, McClellan's communications director.

Balash said the minister would offer no further comment on the issue until she had a chance to talk with officials at the commission.

Taft reiterated his call for the government to immediately launch an independent investigation into the matter to protect other ASC employees from losing their jobs.

"This witch hunt has already claimed its first victim and I fear it is not going to be the last," he said.

He said the commission's decision to hire KPMG to go through employees' computer hard drives is not protecting investors. "If public confidence is lost in the Alberta Securities Commission, we'll see the value of companies decline and the economy of Alberta permanently damaged. In the end, that's my greatest fear."

Code said no more dismissals are expected.

The Alberta Securities Commission is still responsible for the Alberta Securities Act even though the Alberta Stock Exchange merged with the Vancouver Stock Exchange six years ago.

It is responsible for regulating all publicly traded companies registered in Alberta, including most of Canada's biggest oil and gas companies along with WestJet Airlines and CP Rail.

Earlier, McClellan directed the provincial auditor general to investigate the ASC after a number of public complaints were made about the commission's enforcement of securities violations, and to issue a report by July.

McClellan said that although an earlier probe by Calgary lawyer Perry Mack had cleared commission officials of any wrongdoing, the auditor general's review was needed to clear the air and help restore confidence in the agency.