By Tom Adams and Adam Break
When Premier McGuinty first announced in 2004 that he was committed to promoting a “culture of conservation“, who could have imagined that the government would create a rewards program in which conservation program participants could redeem points for plane tickets to destinations like the Caribbean?
The story of how this twisted conservation incentive program took flight centres on Ben Chin.
Chin, the once prominent TV journalist at CBC, CTV, and CityTV, crossed over to what he described as “a higher calling“ after reinventing himself as a provincial Liberal Party candidate in a 2005 by-election. Losing to the NDP’s Peter Tabuns, Chin immediately became a key McGuinty insider and fixer.
With the 2007 McGuinty repeat electoral victory in the bag, in October 2008 Chin had left Premier McGuinty’s Office and started work at National Public Relations (NPR).
At the time, the Ontario Power Authority (OPA) was a client of NPR’s.
After Chin’s arrival at NPR, NPR’s business with the OPA flourished. In early 2009, the OPA contracted with NPR to develop its “Count Me In!” conservation public relations program.
In March of 2009, after only 5 months at NPR, Chin exited NPR and returned to the McGuinty stables to become the VP for Corporate Communications at the OPA.
Chin’s new job at OPA paid very well. In his last full year of employment at the OPA, Chin took in $247k from electricity ratepayers tax dollars without counting his pension entitlements.
In November 2009, under Chin’s watchful eye, the OPA moved to ramp up the “Count Me In” conservation program into an new version that might be called “Count Me In Your Data Base”, issuing a request-for-proposals (RFP) that appeared to be tailor-made for Air Miles reward program. The RFP document set out:
This RFP is an invitation to prospective Proponents to submit Proposals to provide a turnkey solution for a points reward program that will include the design of the points reward system methodology, administration and fulfillment of points, monthly performance reporting and prominent OPA recognition on the Service Provider’s website.
The eligibility criteria Chin put in place appear to have specified Air Miles. Here are those criteria from the RFP:
The eligible proponent must have the ability to offer a points rewards program that allows customers to redeem points through a wide range of businesses. Proprietary rewards points programs that allow customers to redeem points from a single source or organization will not be eligible.
Additionally the following eligibility criteria will be considered:
– ability to include environmentally friendly products and/or services in their offering to consumers for point’s redemption.
– ability to provide co-branding opportunities where necessary
– a website available for consumers to access account information, including activation, redemption and fulfillment of points
– ability to provide different options to redeem points such as activities, goods, services, donations and gift cards.
Air Miles may have been the only firm meeting all the eligibility requirements, although several firms applied.
Throughout the process of contracting with Air Miles, the OPA was not interested in playing a consumer protection role. For example, the OPA was asked during the contracting process “If it does not run after 2010 what happens to accumulated points?” The OPA’s response “Points accumulated by consumers during the campaign period are redeemable at any time in accordance with the redemption policy of the successful Proponent.”
As for Chin’s role in that RFP, the OPA has responded to our inquiries stating,
“Ben Chin was responsible for the competitive procurement process through which AIR MILES for Social Change was selected to be the OPA’s loyalty program partner to promote conservation awareness and enrolment in OPA conservation programs.”
A new source of personal information about Ontario citizens was at stake. During the RFP process, the OPA responded to questions as to whether the successful firm would have direct access to individual customer power usage data. One such example was, “Will it be possible to access the historical and current power usage of consumers who participate in the program from their LDC’s?”
Data mining to probe the souls of individual Ontarians is a special interest for Texas-based LoyaltyOne, which owns Air Miles and Air Miles for Social Change. Originally an Ontario-based company, over 70% of Canadian households collect Air Miles. This provides Loyalty One and its owner Alliance Data with detailed personal information. Many retailers have long term relationships with Air Miles including BMO Financial (offering Air Miles since 1992) and Liquor Control Board of Ontario (offer Air Miles since 1997).
For LoyaltyOne, the opportunity to access energy conservation program participation information for individual Air Miles customers must have seemed like a golden opportunity. The personal information acquired might have attractive resale value to groups ranging from political parties ro retailers.
The OPA’s initial deal with Air Miles was intended to be only from the Spring 2010 until end of that year but there was an option for the OPA to extend the relationship.
Under Chin’s supervision, the program was extended.
One of the beneficiaries of the OPA’s new relationship with Air Miles was the charity WWF-Canada, then headed by former McGuinty Chief of Staff Gerald Butts. The OPA provided an option for participants in designated conservation programs who were AIR MILES Collectors to pledge their AIR MILES reward miles to WWF-Canada.
With McGuinty down in the polls, in February 2011 Chin left the OPA. In March 2011, the OPA issued another “competitive” request-for-proposals that gives every appearance of having been specifically targeted to extend the Air Miles contract. For example, the OPA set an eligibility criteria requiring that “The successful proponent will already have a sizeable database of reward program participants/members available that will be used to promote the OPA conservation campaign.”
Also in March 2011, Chin showed up as “VP for Incentives” at Air Miles for Social Change, an Air Miles affiliate.
The 2011 RFP could have been used to protect the OPA from conferring personal benefits to recent senior staff in a way that might be perceived as a conflict of interest. Section 4.1.1 of the RFP states “If, at the sole and absolute discretion of the OPA, the Proponent is found to be in a Conflict of Interest, the OPA may disqualify the Proposal submitted by the Proponent.” Instead, the OPA approved the RFP and the selection of Air Miles with Chin on the other side of the transaction.
The OPA outsourced compliance reporting for the Air Miles RFP to Knowles Consulting. In a report to the OPA, Knowles Consulting provided this opinion:
One of the Proponents is the incumbent provider of the services to be purchased through the RFP. In addition, an employee of the same Proponent was until recently employed by the OPA. OPA staff provided assurance that the former employee and Proponent had had no role in shaping the deliverables, evaluation criteria or any other part of the RFP; the former employee and Proponent exercised no influence over the OPA staff drafting the RFP or performing the evaluation; and, no Proponent obtained confidential information of any kind and therefore no Proponent was in a position to derive an unfair competitive advantage in this RFP process from confidential information.
With this clearance in hand, in April 2011, the OPA extend its deal with Air Miles. The current deal extends until March 31, 2015.
In July 2011, Tyler Hamilton, a Toronto Star journalist then taking government cash under the table to promote its smart grid agenda, published a “news” report in the Toronto Star extolling the relationship between Air Miles and the OPA. As usual, Hamilton failed to disclose to his readers his then ongoing financial relation with the Ontario government energy programs.
As revealed through the gas scandal disclosures, in November 2010 Chin had proposed that Hamilton be “engaged for central” to aid with rebutting criticism of the government’s Green Energy and Green Economy Act.
In September 2011, Air Miles sponsored Tyler’s book launch for his book “Mad Like Tesla”. Chin emceed the event, describing Tyler as a crack investigative reporter whose probing question Chin, while in the Premier’s Office, “never wanted to answer.” Chin also described Hamilton’s journalism as part of the intellectual foundation for Ontario’s Green Energy and Green Economy Act.
Ben Chin’s electricity career helps to illuminate the real purposes driving those with their hands on the levers of power in Ontario’s electricity system. Practical solutions to Ontario’s energy problems were never the focus for the team Chin played for. Weaving his way around the in-house and outsourced government sector, Chin was engineering a conservation PR culture. At the same time as the “Count Me In” program was being formulated, Ontario was establishing itself as a massive electricity exporter, selling enough discounted and often free power to neighbouring jurisdictions to power substantial cities. To the extent that the conservation promotions and subsidies Chin worked on actually reduced usage in Ontario, the benefits were mostly captured by neighbour utilities. The conservation PR that Chin was engineering was focused on a different kind of power.
On Air Miles specifically (and loyalty programs in general), I do not comprehend why any government agency that has no competition (like the OPA and the LCBO) feels the need and justifies the cost (which just further increases our electricty and liquor prices.
On Mr. Chin’s electricity career – just another example of the liberals surrounding themselves with executioners (they would call them executives) who will do their bidding, with either no regard and/or no understanding of the damage they are doing. The ministry of energy staff used to include many with a background in and understanding of energy. The problem for the liberals was that those people kept pointing out the flaws in their plans to them. So they just started hiring and promotinf staff that would blindly do what ever they wanted – and the less they actually knew about and understood energy, the better.
Tom, compliments to you for such an excellent summary. The provincial authorities charged with executing “conflict of interest rules” have no bite and basically abdicate responsibility for what they should be investigating. I tried, in vain, to try and point some fingers and was told the commissioner had no authority and the rules didn’t/couldn’t apply to people like Chin. Why in the world do we have these useless functions if they have no authority? My posting on this can be found here: http://freewco.wordpress.com/2012/07/04/ontarios-toothless-legislation-conflicts-of-interest-lobbying-go-unpunished/
At what point does conflict of interest become self-dealing?
Influence peddling is something that could be looked into?
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Takes on a whole new meaning of “old boys club”………………
“………………….Air Miles was the charity WWF-Canada, then headed by former McGuinty Chief of Staff Gerald Butts”
Hmm…………….seems the CBC is the recruiting centre for the “Liberal’s puppets!”
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