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Head of Crown company was in conflict of interest, commissioner rules

Ethics Commissioner Mary Dawson has found John Lynn, former chief executive officer of the now-defunct Enterprise Cape Breton Corp., guilty of contravening the Conflict of Interest Act.

Chris Wattie/Reuters

The federal Ethics Commissioner has found John Lynn, former head of a now-defunct federal Crown corporation that delivered regional development to Cape Breton, guilty of conflict of interest.

Commissioner Mary Dawson said in her 15-page report, released Thursday, that Mr. Lynn served as a "paid consultant" to an unnamed company during the time he was the chief executive officer of Enterprise Cape Breton Corp.

This contravenes the Conflict of Interest Act, which prohibits public office holders from managing or operating a business or serving as a paid consultant.

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In her report, Ms. Dawson noted that Mr. Lynn was paid a total of $13,950 for private consulting work he performed for the company, which she calls "Company X," during several days in 2010 and for about four days in 2012.

He was consulting on the sale of a company and the work was not related to his duties at ECBC.

She said her investigation was complicated by "a series of delays relating to Mr. Lynn's participation in the examination process."

Last month, he was fired as head of ECBC a day after another federal watchdog, the federal Integrity Commissioner, ruled he had hired four people to senior positions at the corporation who had close ties to the federal Conservatives and provincial Tories in Nova Scotia.

The Integrity Commissioner found a pattern of hiring that left an "appearance of patronage."

Mr. Lynn was appointed to head ECBC in 2008 by Justice Minister Peter MacKay, who at that time was in charge of the Atlantic Canada Opportunities Agency. Last week, ECBC was subsumed by ACOA.

He had been on a leave of absence from the corporation.

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Ms. Dawson's investigation was provoked by a letter and documents she received from Paul LeBlanc, president of ACOA, that "indicated" Mr. Lynn had worked as a paid consultant. Among those documents, she said, was a "signed personal services agreement dated September 28, 2012 between Mr. Lynn and Company X." It said Mr. Lynn was acting for the company in regard to its sale and that he would receive either a commission on any sale or a per diem consulting fee.

There were also invoices, expense receipts and e-mails among the documents.

Mr. Lynn had tried to argue that there was no conflict of interest between his outside work for Company X and his work with ECBC. He told the commissioner that he was approached by the company in 2007-08, before he was at ECBC. For three years before joining the Crown corporation, he had his own consulting company, Pragmatic Management Solutions.

He said that after he was at ECBC he received "periodic calls" from an official at Company X. But in 2012, he was called again and "asked to identify options for the possible sale of Company X." At that time, he felt an obligation to shareholders to "close the file."

Ms. Dawson said he told her there was an agreement in principle that was made before he became head of ECBC that "he would receive a portion of proceeds of any sale."

"He wrote that since the sale did not go ahead, he did not in fact receive any such payment," she said in her report.

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"Mr. Lynn's position is that the small amount of compensation he had received from Company X was to compensate him for his personal time, effort and out-of-pocket expenses incurred during his work for the company, taking into account his discussions with the shareholders dating back to 2007-2008," Ms. Dawson said.

But she does not accept his argument: "I have concluded that Mr. Lynn … served as a paid consultant to Company X while [CEO of ECBC] and that this was not required in the exercise of his official functions, powers and duties."

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