Who Is Responsible?

$3,000,000 Given To Shell Companies?

In the Nanaimo News Bulletin dated Oct. 12,2010 the Mayor is quoted as saying that while the city has a judgment against Suro, collecting the cash is quite another matter. He went on to explain that many of these companies are shell companies with no assets.

Who Is Responsible?

Past...

You may recall that previous council and city staff entered into a deal with a company to build a hotel next to the conference centre. For their part the city paid them $3,000,000 which was to be in default if the hotel were not constructed. First alarm bell!! When your 'partner' brings no cash to the table, what exactly are they bringing and what makes you think they could repay the $3,000,000??

I think the citizens of Nanaimo are entitled to see the documented due diligence that was undertaken by council and staff before they gave $3,000,000 to a company without any assets. Did the city require their 'partners' to post any performance bonds, or put up any other real guarantee that they would fulfil their end of the bargain?

The individuals I would think would have been responsible for performing due diligence in this matter would have been Mr. G. Korpan, Mr. R. Cantelon, Mr. J. Manhas, Mr. L. Sherry, Mr. M. Unger, Mr.B. Holdom, Mr. L. McNabb, Ms. D. Brennan ( and other councilors I have forgotten)  Mr. J. Berry and Mr. A. Henning.

Present...

The present Mayor and council and city staff including new city manager Mr. A. Kenning need to demonstrate the due diligence they performed before undertaking this legal action. The Mayor is quoted as saying it had to be done as; "nothing ventured, nothing gained". He also is quoted as explaining we are dealing with shell companies. I have a hard time with the logic of suing shell companies without assets? Getting blood from a stone comes to mind.

Just to put the 'cherry on top' the Mayor is also quoted as saying the settlement will likely go to arbitration, meaning he is telling Suro we have no hopes of collecting the full amount, and will settle for what we can get.

In this particular case it will be interesting to see how much money we have spent on legal fees, and should by chance pigs begin flying, we just might recover more than we have spent. But I will not be holding my breath.