REPORTS SUGGEST CONFLICT OF INTEREST SURROUNDING IPAC-CO2 CONTRACT

Tamar Hallerman
GHG Monitor
2/22/13

A series of reports published this week by Canadian broadcaster CBC News suggest a conflict of interest related to a contract signed by the nonprofit International Performance Assessment Centre for the Geologic Storage of Carbon Dioxide (IPAC-CO2) in its early days of operation and then-leaders Malcolm Wilson and Ian Bailey. CBC News published multiple stories this week alleging that at one point both men, as acting leaders of the Regina, Saskatchewan-based IPAC-CO2, entered into an agreement for an IT system with a company that they had helped found and sat on the board of at the time. The reports say Wilson and Bailey—who have not been affiliated with the CO2 storage-focused nonprofit for more than two years—entered into a sole-source agreement with Climate Ventures Inc. (CVI) to run IPAC’s computers without a competitive bidding process or a written contract. Quoting current IPAC CEO Carmen Dybwad, the news outlet said the agreement at one point accounted for 60 percent of the then-startup’s budget in exchange for negligible services.

When contacted by GHG Monitor, colleagues of Wilson, who is now CEO of the Petroleum Technology Research Centre, said he was on vacation this week and unavailable for interviews. But in an e-mailed statement to GHG Monitor, Wilson’s lawyer David Brundige said there was no conflict of interest in the IPAC-CVI deal because Wilson’s involvement with the two companies did not overlap. He said Wilson ended his involvement on CVI’s board of directors in August 2008 and transferred his common shares in the company by March 2009, long before he joined IPAC’s board in September 2009. “Dr. Wilson’s involvement with CVI had terminated well before he joined the IPAC Board on September 1, 2009, therefore it is our position that no conflict, apparent or otherwise, existed,” Brundige said. Bailey, who is on long-term disability from his position at the University of Regina, was unavailable for comment.

CBC News’ reports, though, particularly questioned Wilson and Bailey’s roles in March 2009. Citing federal industry records, CBC said Wilson resigned from CVI in April 2009, with his resignation backdated to August 2008. CBC alleged that Wilson represented himself as a CVI employee in a December 2008 report and that his involvement with IPAC dates back to at least November 2008, when the University of Regina, the provincial government and Royal Dutch Shell first announced IPAC’s formation. A Nov. 6, 2008 announcement about the creation of the nonprofit lists Wilson as its acting director. CVI President Henry Jaffe and a member of IPAC-CO2’s board did not respond to requests for comment.

Contract Prompted Series of Reviews

Wilson and Bailey’s previous roles at CVI, once unveiled internally at IPAC, caught the attention of Saskatchewan’s provincial government, according to CBC News. It reported that the government there, along with co-funder Royal Dutch Shell—both which provided $5 million in seed money for IPAC-CO2—temporarily discontinued funding until an internal report examining the relationship between IPAC and CVI was filed. Donna Harpauer, the Saskatchewan minister in charge of overseeing the province’s funding to IPAC, declined to be interviewed for this story through her staff.

Meanwhile, the situation also prompted the University of Regina of review its contracting practices in 2011. The university oversaw IPAC in its startup days and provided in-kind support at the time through office space and senior staff—Wilson and Bailey both held positions at the University of Regina when they initially started with IPAC—Barbara Pollock, the university’s vice president of External Relations, said in an interview with GHG Monitor. “When we were realizing [Wilson and Bailey’s prior involvement with CVI] about six or seven months later, we asked them about it and they had already removed themselves from the directorship sometime earlier. By all means it wasn’t something we thought was going to look good or be appropriate, but we didn’t have to ask them to remove themselves because they had already done that,” she said. Pollock said U of R’s review showed “gaps” in the University’s internal practices regarding contracting and signing authority. “We immediately tightened things up. We’ve instituted a much more rigorous oversight of contractual arrangements,” she said. Pollock added that outside of three positions on IPAC’s board of directors, U of R is not longer involved in the daily operations or financial oversight of IPAC.

IPAC’s board also hired the accounting firm Meyers Norris Penny to conduct its own investigation regarding the CVI contract in 2011. That report concluded that CVI appeared to have received “favorable treatment” from IPAC following a verbal agreement between Jaffe and Wilson and that the monthly payments to CVI were “not supported by specific deliverables.” The review concluded that the CVI contract did not adhere to University of Regina contract management policies. “Dr. Wilson and Mr. Bailey did not disclose their conflict of interest to the University of Regina. However, we have no evidence that Dr. Wilson or Mr. Bailey monetarily benefited from their relationship with CVI,” the report says. Meanwhile, Brundige said Wilson “never” profited from IPAC’s contract with CVI. “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,” he said.

IPAC-CO2 was established with the goal of providing risk and performance assessments of CO2 storage projects. Most recently, the group jointly released what it said is the world’s first consensus standard for the geologic storage of CO2 with the Canadian Standards Association. IPAC jumped into the media spotlight in mid 2011 when it conducted an independent analysis of an alleged CO2 leak on a family farm near the Weyburn-Midale enhanced oil recovery site in southeast Saskatchewan. In a peer-reviewed report released in December 2011, the group concluded that there was no evidence of CO2 seepage onsite.