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This column was originally published Oct. 10, 2019.

It was up to Gord Lambert, the Alberta Energy Regulator’s interim chief executive officer, to apologize to 1,200 employees, many of whom feel betrayed, and reassure them that a nightmare at the agency is ending.

Three bombshell reports after investigations into the actions of Mr. Lambert’s predecessor, Jim Ellis, concluded that dozens of staff were pushed into working on a rogue side project, and that anyone who questioned how millions of dollars’ worth of AER resources were being diverted would be dealt with harshly, with the threat of dismissal.

On Oct. 9, Mr. Lambert led an audio town hall meeting for AER staff, where he and his senior leadership team addressed the crisis of credibility that enveloped the agency, and pledged to rebuild the organization into one where staff can speak up without retribution if they see reason to do so. They also responded to submitted questions about the next steps.

Alberta’s Public Interest Commissioner, Ethics Commissioner and Auditor-General said Oct. 4 that Mr. Ellis, who left the AER last November, and his allies misused public funds and resources, and strained the AER’s own ability to operate efficiently, when they created a venture called the International Centre of Regulatory Excellence (ICORE). The reports detailed how the board was deceived about the true intention behind the venture and that a whistle-blower from within alerted authorities in mid-2018.

“Like you, I’m deeply frustrated and disappointed about what I’ve read in the reports,” Mr. Lambert said in his town hall remarks. “It’s very difficult to process and I am experiencing many emotions myself – from anger to regret about not seeing the reality sooner, to resentment for the damage done to our organization’s reputation.”

Mr. Lambert is a former Suncor Energy Inc. executive who had been on the AER’s board while ICORE was being set up. He said he had understood at the time that the unit was to be an organization that fostered the sharing of regulatory practices with other jurisdictions, in similar style to Canada’s Oil Sands Innovation Alliance, or COSIA. At that organization, companies share environmental technology with the aim of improving performance industry-wide. ICORE turned out to be very different, he said.

The reports looking into ICORE said the former executives created the not-for-profit business to provide future work and business opportunities for Mr. Ellis and his close confidantes. Mr. Ellis has not returned calls from The Globe and Mail to respond to the reports.

“Imagine an iceberg. There’s a portion that’s above the water line, but there’s a major amount that’s below the waterline. Thank goodness for the whistle-blower, who made us realize the reality of the below-the-waterline activities that have now been disclosed as deliberate wrongdoing,” Mr. Lambert said.

“I will not sugarcoat unpleasant facts. The reality here is that several previous leaders took actions that were in their self-interests, but not in the organization’s interests, and hid these intentions very deliberately from the board and [executive leadership team].”

Nonetheless, he said, he takes “personal accountability” that it happened while he was at the AER, an industry-funded agency tasked with making sure Alberta’s largest industrial sector operates safely and responsibly. He also said employees who were seconded to ICORE shouldn’t feel any guilt.

During ICORE’s establishment and later as investigators probed what happened, the AER was also dealing with a rising tide of environmental liabilities as companies faltered and left thousands of aging and idled wells in its hands. The estimated cleanup costs have ballooned into the hundreds of millions of dollars.

The next step for the AER, Mr. Lambert said, will be to recreate the organization into one that encourages employees to speak up on how best to operate on behalf of the industry and the public as part of an initiative called “AER 2.0.” The new structure is being devised as Premier Jason Kenney’s United Conservative Party government undergoes as review of the regulator, which i launched last month.

More details are expected to be made available by the senior executives once the AER’s new budget is announced along with the Kenney government’s first provincial budget on Oct. 24. Mr. Lambert said the regulator’s new structure will then be announced in detail sometime before the end of this year.

The new era can’t begin soon enough, as far as the employees are concerned. Apologies are a start, but most want to believe they perform critical roles in an agency that was once the envy of the regulatory world and has a solid plan to rebuild its credibility.

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