Redford furious over conflict of interest allegations on the tobacco lawsuit

By Keith Gerein, Edmonton Journal November 29, 2012 10:38 AM

EDMONTON – An angry Premier Alison Redford, an outraged opposition and allegations of a conflict of interest provided the ingredients for an emotionally charged day at the Alberta legislature Wednesday.

The animosity reached its pinnacle in question period, when Wildrose and NDP leaders accused Redford of political patronage over the awarding of a lucrative contract to a law firm that employs her ex-husband.

“This raises disturbing questions of conflict of interest, perceived conflict of interest, manipulation of the process, and at the very least horrible judgment,” Wildrose Leader Danielle Smith said.

That was followed by an explosive exchange between Redford and Wildrose critic Rob Anderson, who suggested he might make a complaint to the Law Society of Alberta about Redford’s conduct.

“The tangled web never ends, does it?” he said, noting the president-elect of the society is a senior partner at the same firm in question.

An enraged Redford fired back at Anderson that he was denigrating the entire legal community. Staring down the Wildrose caucus, she dared him to make good on his threat.

“This getting absolutely absurd,” she said to loud applause from her caucus. “If this person (Anderson), who theoretically should understand what the Law Society is, is now prepared to malign the legal profession, I have no idea where this discussion is supposed to go. But I’ll tell you, if this honourable member decides to make a complaint, go ahead.”

The firm in question, Calgary-based Jensen, Shawa, Solomon, Duguid and Hawkes, is part of a consortium known as Tobacco Recovery Lawyers LLP representing the province in a $10-billion lawsuit against the tobacco industry. Robert Hawkes, one of the named partners, was married to Redford for five years while both were in their 20s. The two have stayed friends and Hawkes led Redford’s transition team after she was elected PC leader.

The government insisted earlier this year that Tobacco Recovery Lawyers LLP was chosen through a competitive bid process in December 2010, when Redford was still justice minister. A review committee was appointed to consider three bidders.

However, an internal government memo obtained by CBC and the Wildrose indicates Redford was involved in the selection.

The Dec. 14 memo, from Redford to deputy justice minister Ray Bodnarek, says: “I note that the review committee considers all three firms interviewed to be capable of adequately conducting the litigation and believes that while no consortium stood above the others, all three have unique strengths and weaknesses.

“Considering the perceived conflicts of interest, actual conflicts of interest, the structure of the contingency arrangements and the importance of a ‘made in Alberta’ litigation plan, the best choice for Alberta will be the International Tobacco Recovery Lawyers.”

The opposition said the memo shows Redford acted improperly by picking a firm whose partners included a close personal and political friend. They said the proper thing to do would have been to remove herself from any role in the decision.

However deputy premier Thomas Lukaszuk and current Justice Minister Jonathan Denis came to Redford’s defence.

While Redford decided which of the three firms the government should negotiate with first, she did not make the final call, Denis said.

He said that following Redford’s memo, the province hired a separate firm to negotiate a contract with Tobacco Recovery Lawyers LLP, a process that took six months. When the contract was eventually signed in June 2011, the justice minister at the time was Verlyn Olson as Redford had stepped down to run for the PC party leadership.

As such, the final decision was made by Olson, Denis said.

“I’m not aware of any particular conflict of interest. I don’t see how any members of the cabinet or premier could benefit from this,” he said. “A person’s former spouse is not listed as one of the conflicts of interest.”

Glenn Solomon, a senior partner at the successful firm, confirmed Denis’s timeline. He said no contract was awarded or promised until the negotiations concluded during Olson’s tenure.

“What we were told, in no uncertain terms, was that the government was going to enter into discussions with us to see if we could reach an agreement. If that failed, they would turn to other bidders,” he said.

“At the time the deal was struck … Alison Redford had no input on that. She wasn’t in the picture.”

One of the other bidders was national firm Bennett Jones, which is leading the litigation against big tobacco for up to six other Canadian provinces. But Denis said Alberta decided to go with separate representation in part to avoid a legal conflict of interest in the case.

“One of the issues is that if (the national firm) is acting for another province as well as acting for Alberta, what could potentially happen is somewhere down the road in the litigation, you will find a situation where our interests as the province of Alberta may actually be different than another province,” he said. “And that can cause us a lot of problems in the litigation.”

Denis said Hawkes was not involved in the bid or the negotiation, and will have nothing to do with the case.

However, as NDP Leader Brian Mason pointed out, Hawkes could stand to financially benefit.

Though it is expected to take years to resolve, the massive lawsuit could be highly lucrative for both the government and its lawyers, who are conducting the case on a contingency-fee basis. That means the law firms involved take on all the upfront costs, but are expected to get a percentage of any eventual settlement or award, which could add up to hundreds of millions of dollars.

The Wildrose, which plans to file a complaint with the provincial Ethics Commissioner, used all nine sets of questions allotted to them Wednesday to ask about Redford’s role in the hiring decision. That led to countless shouts across the aisle and duelling points of order, forcing Speaker Gene Zwozdesky to interject several times to demand decorum.

A battle also broke out on social media, as Denis and his press secretary sparred with Wildrose members and a CBC reporter.

Duane Bratt, a political scientist at Mount Royal University, said the opposition and media were blowing the controversy out of proportion.

“Not every issue is a serious conflict, and we need to be able to separate what is a fact of doing business here and what is ethically wrong,” he said.

He said the opposition would likely be crying foul no matter which of the three firms were chosen, since all have personal ties to the PCs and have donated money to the party. In the case of Bennett Jones, the firm has been a regular contributor to the PCs, and was represented for years by former premier Peter Lougheed. More recently, one of the firm’s senior advisers, Jack Major, was appointed to review MLA pay.

Bratt said the prevalence of such ties between major law firms and the PCs is a reality of having the same government in power for four decades.

“I think that if you go through almost every law firm, you’d find ties to every party here,” Denis said. “There are binders full of lawyers everywhere around this province.”

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